South Korea’s antitrust watchdog is likely to retain its exclusive right to charge businesses despite prosecutors’ claim that it should be abolished with intent to expand their investigation power, based on a report by a special committee.

On Thursday, the special committee dedicated to reforming the nation’s fair trade law announced the results of a three-month review.

The highlight was whether to abolish the Fair Trade Commission’s exclusive right to charge businesses. Under the current law, prosecutors can begin an investigation only when there is an accusation from the FTC in the areas of violation of fair trade laws, such as price fixing and collusion. 

The nine members, comprising economists and legal experts in the competition subcommittee of the special committee set up under the FTC in February, said they are slightly more in favor of maintaining the FTC’s exclusive right than partial abolition, although the opinion was tight with 5-4.

The members in favor of maintaining the right said simultaneous investigation by the FTC and prosecutors would be excessively harsh and may constrict the economy. Instead, they argued an obligatory accusation system should be expanded. Under the system, the FTC would be obliged to report companies to prosecutors if their violation “objectively and clearly damages” the competition order.

The members in favor of stripping the FTC’s exclusive right said collusion should be handled more harshly by prosecutors as it has a negative impact on the market economy.

If prosecutors secure the exclusive right to charge businesses, there would remain an issue of leniency, a system that exempts companies from punishment when they voluntarily report collusion. The FTC’s leniency system would turn nominal if prosecutors have the exclusive right to charge.

The special committee did not come up with an answer for the leniency issue, saying, “We agreed that the leniency should not be nominal even if the FTC’s exclusive right to charge businesses are partially abolished.”

“But for the strengthening of cooperation between the FTC and prosecutors, there should be legal grounds for the FTC to provide leniency information to prosecutors.”

The special committee will provide its final review by July and the FTC will announce the draft of the overhaul of the fair trade law at the end of July. The FTC plans to put the proposed legislation to the National Assembly later this year.

Last week, prosecutors raided the FTC on allegations that the FTC overlooked some companies’ violation of fair trade laws in exchange for recruitment favors. Some media outlets raised speculation that prosecutors raided the FTC as the two organizations had conflicts in the process of the FTC’s overhaul of the law.

By Shin Ji-hye (shinjh@heraldcorp.com)