Hello. I am Attorney Eom Sang-yoon from Cheongchul Law Firm.

In the previous column, I explained that the amendment of the ‘Monopoly Regulation and Fair Trade Act’ (hereinafter referred to as "Fair Trade Act") in 2021 prohibited agreements to exchange competition-restricting information (Article 40, Paragraph 1, Item 9), and that if there is a superficial similarity and it can be proven that necessary information was exchanged, an agreement concerning collusion could be ‘presumed’ (Article 40, Paragraph 5, Item 2). Therefore, even in the absence of explicit agreements on transaction conditions among businesses, collusion could be established if sensitive competitive information is exchanged.

[Fair Trade, Collusion] Unfair Joint Actions through Information Exchange - Cheongchul Law Firm

Since then, there had been no cases of collusion penalties under the revised law until recently when information exchange collusion was recognized in the ‘LTV collusion case of four major banks.’ Today, we will look into how the revised law was applied to information exchange activities through this case.

[LTV Collusion Sanction Against the Four Major Banks by the Fair Trade Commission]

The Fair Trade Commission (hereinafter referred to as "FTC") reported that four large commercial banks exchanged information on the Loan-to-Value Ratio (LTV), a key trading condition for real estate mortgage loans, and used this to restrict competition in the real estate mortgage market, imposing corrective orders and a total of 272 billion won in fines on these banks in January 2026.

The Loan-to-Value Ratio refers to the ratio of the loan amount to the value of the real estate collateral, and banks use this ratio to determine the amount of mortgage loan (valid collateral value) they can provide. This encompasses not only the evaluation of the real estate market outlook but also the marketing strategy regarding how much to lend to borrowers, thus each bank's LTV ratio is typically considered a trade secret and is not disclosed externally.

Looking at the specific actions recognized by the FTC, it has been confirmed that the four major banks exchanged their LTV ratio information, ranging from a minimum of 736 cases to a maximum of 7,500 cases, on a regular basis as necessary over a long period. Furthermore, each bank's personnel requested and received information from other banks as needed, and to avoid possible legal violations, they sometimes erased traces of these information exchanges. The banks exchanged information applicable to individual real estates and were able to understand the LTV ratio plans that the counterpart banks would apply to all domestic real estates.

The FTC concluded that the four major banks were able to maintain the LTV ratio at a similar level for a prolonged period through such information exchange activities (adjusting upwards when their LTV was lower than other banks and downwards when higher), and that they could evade competition in the real estate mortgage loan market.

[Implications of this Case]

The LTV collusion case is the first instance in which the FTC recognized collusion under the revised law regarding information exchange. The legal provisions applied by the FTC are as follows.

According to the provisions of the Fair Trade Act prior to the complete amendment, there was a strict requirement for proving the agreement of business operators, making it difficult to regulate even if competition in the market was restricted due to information exchange activities. There were several instances where the FTC lost in lawsuits regarding collusion based on information exchange (such as ramen collusion, cargo truck collusion, etc.). To solve this legally, provisions for 'prohibition of information exchange agreements' and 'presumption of agreements through information exchange' were newly established in the fully amended Fair Trade Act.

Meanwhile, according to media reports, the four major banks subject to the sanctions are expected to file lawsuits against the FTC's judgment, and the FTC's judgment has not been finalized. As the LTV collusion case applies the revised law provisions stating that 'collusion can be established simply through the act of exchanging sensitive information, even without agreeing on prices or quantities,' fierce legal disputes between the two sides are anticipated.

However, as the revised law explicitly prohibits information exchange agreements, it seems that it will be more difficult for the implicated banks to legally refute the claims compared to previous information exchange cases, and whether the facts of the actions can be proven is expected to be a key issue. Furthermore, it has been a prevalent judicial stance that it is difficult to find efficiency-enhancing effects outside of the competition-restricting effects in cases of collusion, and in the case of information exchange agreements, the impacts on the market are not as direct compared to agreements on prices and transaction conditions, so the FTC's burden of proof regarding competition-restricting effects may need to be more political than in typical collusion cases.

In light of these sanction cases, companies need to reflect on whether the information exchanges that were taken for granted could actually be considered collusion, and whether they are setting prices or transaction conditions based on confidential information from other firms. If it is found that there are practices of information exchange at the operational level that the C-level did not recognize, rapid leniency applications should be considered.  

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