High Raise of Surcharge by Korea Fair Trade Commission

Korea Fair Trade Commission (KFTC) has decided to raise surcharge, starting in June, in order to prevent the illegal trade by the large companies.

KFTC announced yesterday that it will apply the revised `Notification of Criteria for Surcharge,` which specifies the maximum amount of surcharge. In the existing `Notification,` the maximum amount of surcharge is limited to 2000 million won for misfeasance and 500 million won for illegal trade. However, KFTC will be able to charge 3percent and 2percent of total sale price respectively according to the revised `Notification.`

Surcharge for the violation of the restriction on the `concentration of economic power` will be raised from 7percent to 10percent. Surcharge will be raised up to 10 times more than before for the violation of restrictions on the mutual investment, guarantee of debt, and on holing company. Along with this, discretionary power of KFTC will be expanded. In order to induce the cash settlement of subcontracting fee, surcharge will be reduced when the 80% of the cash settlement of subcontracting fee is made.

Choi Young-Hae moneychoi@donga.com