REPORTER’S NOTEBOOKNew FTC chief tasked with recovering tainted authority image

Headquarters of the Fair Trade Commission at the Government Complex Sejong / Yonhap

The next leader for the Fair Trade Commission (FTC) is tasked with recovering the watchdog’s tainted image by slapping “more fair and trustworthy” sanctions on local companies.

Under the former Yoon Suk Yeol administration, the authority was disgraced for a series of its failed regulatory pushes on multiple big firms. In recent years, higher courts have overturned a number of such cases after regulation-hit firms made appeals for their innocence.

In June 2023, the FTC ordered Kakao Mobility to pay fines of 27.1 billion won ($20 million) on suspicions that the company gave unfairly preferential treatment to its affiliated taxi partners while the company operated its Kakao Taxi ride-hailing service.

Kakao Mobility filed an administrative suit, claiming its innocence against the sanction. Last month, the Seoul High Court sided with the company, ordering the FTC to cancel the fines imposed on the company. The court ruled that Kakao Mobility did not engage in any unfair transaction activities with its partners, and that the FTC’s sanction should be revoked.

The case has now been brought to the Supreme Court. It remains to be seen whether Kakao Mobility will be found not guilty by the top court, but the company has caught massive flak from society, which weakened its brand image.

“Once a company is mired in such a case, it has to spend an enormous amount of money for a legal battle,” an official from a conglomerate said. “The capital could be used for other areas, such as investment in future growth areas or manpower expansion, unless it is spent dealing with the legal affair.”

Last year, the Supreme Court also ruled in favor of SPC Group, after the bakery chain operator was slapped with a fine of 64.7 billion won from the FTC for the firm’s allegedly unfair business activities. In 2020, the watchdog argued the company unduly supported one of its affiliates for the group’s managerial succession and issued the massive penalty. However, the top court ultimately canceled the FTC order.

“Even after winning a lawsuit of a similar kind, companies lose more in terms of their corporate image, as they are seen having engaged in unfair business activities from the viewpoint of customers,” another official from a company here said. “It is too late to recover the image, as it takes at least a few years for companies to prove innocence.”

Following multiple lawsuit losses, the FTC’s old glory is rapidly fading away.

With President Lee Jae-myung ordering the FTC to increase its investigative manpower, the next unconfirmed chief for the authority is advised not to repeat the same mistakes and focus more on winning back trust from the public.