By Nam Hyun-woo
A growing number of businesses are expressing concerns about the antitrust agency's decision to give up its exclusive rights to file complaints about antitrust cases, which it will now share with the prosecution.
They are worried that the power sharing between the Fair Trade Commission (FTC) and prosecutors will lead to more antitrust investigations. Business owners think the two will compete to grab headlines by initiating more probes.
The owners are also worried that corporate activities may be discouraged if the prosecution starts "politically motivated" investigations to "tame" certain businesses.
According to the agreement made between the FTC and the Ministry of Justice, the prosecution can now also investigate major corporate antitrust cases without the FTC filing a complaint. However, the FTC will maintain its exclusive right over minor cases.
Though the FTC said the move will "balance law enforcement and promote a healthy market economy," companies and business groups say they now have "two grim reapers" they should look out for.
"The FTC giving up of its exclusive rights does not mean it will not look into companies. It means we are now under the scope of both the FTC and the prosecution and the chance of a company being investigated will become greater," said a conglomerate official who refused to be named.
"And we are quite sure that industries, such as construction, whose structure is prone to price collusion, will see the number of investigations by the prosecution grow explosively."
In the agreement, the FTC Chairman Kim Sang-jo said the antitrust agency will give up its rights for "hardcore cartel" cases, including price collusion, supply restriction, dividing markets and bidding collusion.
However, most of companies the FTC imposed fines on or filed complaints against with the prosecution in recent years were categorized as hardcore cartel cases, meaning the number of companies that the prosecution could investigate could grow.
Companies also express concerns that the level of punishment will be harsher under the new scheme, because a case which could have ended up facing administrative measures in the current system can lead to the prosecution's investigation, dealing a serious blow to a company's reputation.
Unlike the FTC, the prosecution has the right to search and seize, meaning investigated companies will likely see their operations paralyzed.
"An antitrust case should at first be handled through comparative analysis of the market environment and then should be taken to the prosecution for further action," an official at a domestic business association said.
Another point drawing concern is the expected withering of "leniency" cases.
The FTC also agreed to hand over information on such cases to the prosecution, where a cartel member who reports its cartel membership to the FTC, seeks partial or total exemption from penalties. The FTC resorted to the leniency program to investigate major cartels.
"With the prosecution's expanded authority, the benefit of leniency will likely decrease because companies could be afraid of the prosecution bringing separate cases," said Kim Gee-hong, a lawyer at the firm Jipyong.
"After the FTC gave up its exclusive right, the number of cases in which the prosecution will autonomously investigate and indict will likely grow," Kim said.
"With pressure increasing for companies which can be subject to cartel regulations, they have to strictly comply with the law because the prosecution can investigate other issues of the company they are looking into in an antitrust case."
A growing number of businesses are expressing concerns about the antitrust agency's decision to give up its exclusive rights to file complaints about antitrust cases, which it will now share with the prosecution.
They are worried that the power sharing between the Fair Trade Commission (FTC) and prosecutors will lead to more antitrust investigations. Business owners think the two will compete to grab headlines by initiating more probes.
The owners are also worried that corporate activities may be discouraged if the prosecution starts "politically motivated" investigations to "tame" certain businesses.
According to the agreement made between the FTC and the Ministry of Justice, the prosecution can now also investigate major corporate antitrust cases without the FTC filing a complaint. However, the FTC will maintain its exclusive right over minor cases.
Though the FTC said the move will "balance law enforcement and promote a healthy market economy," companies and business groups say they now have "two grim reapers" they should look out for.
"The FTC giving up of its exclusive rights does not mean it will not look into companies. It means we are now under the scope of both the FTC and the prosecution and the chance of a company being investigated will become greater," said a conglomerate official who refused to be named.
"And we are quite sure that industries, such as construction, whose structure is prone to price collusion, will see the number of investigations by the prosecution grow explosively."
In the agreement, the FTC Chairman Kim Sang-jo said the antitrust agency will give up its rights for "hardcore cartel" cases, including price collusion, supply restriction, dividing markets and bidding collusion.
However, most of companies the FTC imposed fines on or filed complaints against with the prosecution in recent years were categorized as hardcore cartel cases, meaning the number of companies that the prosecution could investigate could grow.
Companies also express concerns that the level of punishment will be harsher under the new scheme, because a case which could have ended up facing administrative measures in the current system can lead to the prosecution's investigation, dealing a serious blow to a company's reputation.
Unlike the FTC, the prosecution has the right to search and seize, meaning investigated companies will likely see their operations paralyzed.
"An antitrust case should at first be handled through comparative analysis of the market environment and then should be taken to the prosecution for further action," an official at a domestic business association said.
Another point drawing concern is the expected withering of "leniency" cases.
The FTC also agreed to hand over information on such cases to the prosecution, where a cartel member who reports its cartel membership to the FTC, seeks partial or total exemption from penalties. The FTC resorted to the leniency program to investigate major cartels.
"With the prosecution's expanded authority, the benefit of leniency will likely decrease because companies could be afraid of the prosecution bringing separate cases," said Kim Gee-hong, a lawyer at the firm Jipyong.
"After the FTC gave up its exclusive right, the number of cases in which the prosecution will autonomously investigate and indict will likely grow," Kim said.
"With pressure increasing for companies which can be subject to cartel regulations, they have to strictly comply with the law because the prosecution can investigate other issues of the company they are looking into in an antitrust case."
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