‘Insensible Surcharges’ Hurting Business

The amount of money the Fair Trade Commission (FTC) refunded to enterprises from surcharges it collected from them after losing administrative litigation or accepting objections raised was 65.567 billion won last year, the highest total ever recorded on an annual basis.

There is high possibility that the record will be broken again this year as the refund from surcharges in the first half already totals 43.485 billion won, which is bigger than the last year’s amount over the same period.

In addition, the surcharge imposed between 2003, when the current administration was established, and August 20 this year amounts to 839.4 billion won, and the refunded amount is 174.558 billion won (as of end June this year).

As a result, criticism is being raised that the inappropriate imposition of a surcharge by the FTC is degrading the images of the enterprises concerned and shrinking overall business activities.

According to a report the FTC handed in to Grand National Party assemblyman Kim Jeong-hoon of the National Policy Committee on September 7, the amount of refund from surcharges (including fines) last year was 65.567 billion won (54 cases), which is 2.6 times bigger than 2005 (24.637 billion won).

The amount of refund from surcharges by the FTC last year was the highest in terms of annual basis and was as large as 37% of all the surcharges the FTC imposed in the same year: 175.265 billion won.

Since 2003 the refund has been growing every year by large degrees. Out of the surcharge imposed, the money the FTC voluntarily cancelled for lack of evidence is also as high as 27.079 billion won.

The surcharge the FTC imposed between 2003 and August 20 this year was 839.461 billion won (in 823 cases). When the surcharge imposed on Hyundai Motors Group (63.1 billion won) and those expected to be imposed on pharmaceutical companies and the life insurance industry are included, it is likely to surpass one trillion won within this year.

Such frequent impositions of surcharges by the FTC have induced the economic circle to enhance education on the Fair Trade Act for preventative ends.

Even though an enterprise clears charges and restores them through administrative litigation, it is denounced as an immoral company because the FTC made public its name when imposing the surcharge.

Head researcher Lee Ju-seon of the Korea Economic Research Institution says, “Inappropriate impositions of surcharges damage the intangible assets of enterprises, such as corporate images and brands earned through tremendous investment. The FTC should seriously reflect on whether the surcharges are adequate.”

cha@donga.com imsoo@donga.com