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Recent Trends in Criminal Antitrust Investigations in Korea

2023.08.08

Recently, there has been an increasing number of cases where the Prosecutor’s Office (“PO”) initiated investigations on antitrust matters traditionally first taken up by the Korea Fair Trade Commission (the “KFTC”), such as violations of the Monopoly Regulation and Fair Trade Act (the “MRFTA”) and bid rigging.  While it is not unheard of for the PO to take the initiative in probing violations of the law, the general practice in the antitrust arena has been for the PO to wait until the KFTC completes its investigation and files criminal charges with the PO.  This new trend in Korean antitrust enforcement is worth taking notice for companies doing business in Korea as the investigation authorities and processes become more multifaceted. 
 
 
1. Two Bid Rigging Cases Involving Home Furniture Manufacturers and School Uniform Dealers 
 
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Case 1 involved home furniture manufacturers that allegedly rigged the bids for “special sale” furniture.  The Seoul Central District Prosecutor’s Office investigated the allegation and indicted 8 furniture manufacturers and 14 individuals who were officers and employees of the manufacturers on April 20, 2023 in relation to bid rigging allegation.  Case 2 involved alleged bid rigging by school uniform dealers in Gwangju area.  The Gwangju District Prosecutor’s Office investigated the allegation and indicted 31 individuals related to this case.  Notably, in both cases, the respective POs began their investigation before the KFTC concluded its own investigation, and proceeded with indictment after the KFTC filed criminal charges. 
 
 
2. Initiating the Investigation 
 
Case 1 is particularly noteworthy as this was one of the first instances where the PO commenced investigation under the Cartel Leniency Program.1  In the past, the PO normally did not take action until the KFTC had concluded its investigation and filed criminal charges.  In contrast, in Case 1, the PO began its own investigation and consulted the KFTC afterwards.  According to the PO’s press release, the PO and the KFTC discussed the scope of the charges and other issues once the PO’s investigation was nearly concluded. 
 
In Case 2, an NGO, after it became aware of the alleged cartel conduct among school uniform dealers, alerted the Gwangju Metropolitan Office of Education which subsequently led to the KFTC’s investigation.  The matter was then reported in the media, after which the Gwangju District Prosecutor’s Office began investigating the matter itself, resulting in the KFTC filing criminal charges with the PO. 
 
 
3. Filing of Criminal Charges through Cooperation between the PO and the KFTC 
 
Violations of the MFRTA can be prosecuted only if the KFTC files criminal charges for such violations (MRFTA Art. 129(1)).  However, the crime of bidding interference under the Criminal Code and violations of the Framework Act on the Construction Industry can be prosecuted without the KFTC’s involvement. 
 
The PO focused on these 2 crimes in the above two cases.  Whether or not the PO would also prosecute violations of the MRFTA (which were concurrently being investigated by the KFTC) and how the KFTC would react to the PO’s potential request for the KFTC’s filing of criminal charges were points of particular interest during the PO’s investigations.  This was because the KFTC (i) rarely filed criminal charges before completing its investigations, and (ii) undergoes a deliberation process before deciding whether to file criminal charges upon request by the PO. 
 
Ultimately, the PO prosecuted the MRFTA violations in addition to the other crimes in both cases.  It was later revealed that The KFTC filed criminal charges promptly following the PO’s investigation as (i) the PO and the KFTC had been discussing the charges’ scope of while the KFTC’s investigation was ongoing , and (ii) rather than conducting a formal deliberation on the PO’s request, the KFTC’s examiner exercised his own authority under Article 61(3)(5) of the KFTC’s Rules on Committee Operation and Case Handling Procedure, Etc to proceed expeditiously with the criminal charges. 
 
 
4. Process Flow of the PO’s Investigation of Antitrust Matters 
 
<img alt="" height="265" src="https://www.jipyong.com//newsletter/kli/44_202308/img/board2.png" width="822" /> 
 
 
5. Conclusion 
 
As shown above, the PO has recently shown a growing interest in initiating cartel investigations.  It is important to note that the PO has been moving swiftly in both the investigation as well as indictment decisions, and also that both corporations as well as individuals may be subject to such swift actions.  This trend is expected to continue into the foreseeable future. 
 
<a href="https://www.jipyong.com/kr/board/news_view.php?seq=12064" target="_blank">[Link to Korean Newsletter]</a> 
 
<img alt="" height="115" src="https://www.jipyong.com//newsletter/kli/44_202308/img/board3.png" width="822" />

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