The Fair Trade Commission, the Ministry of Justice and the ruling Minjoo Party of Korea held a government-ruling party meeting on Monday to make complete revisions to the Fair Trade Act, which will abolish the FTA’s exclusive complaint right and strengthen regulations on intra-group transactions. They plan to have discussion across the political arena and pass the relevant bill into law in June. It has been reported that government-ruling party agreement was reached on the first-ever "complete revision" in 39 years since the act was established in 1980. Different from partial revisions to some clauses, the latest revision entails a wide range of amendments that can equal replacement of the existing act by a new one.
It is worthwhile to amend the Fair Trade Act given that the Korean economy has grown significantly and types of trade have diversified. The right way to go is to prevent monopoly and promote fair trade competition, leading to economic revitalization and greater consumer benefits. However, there is plenty chance that the amendment of the act could cause over-regulation and furthermore bash large companies considering that Minjoo Rep. Min Byung-Doo, the chairman of the National Policy Committee, said that increasing public awareness can put pressure on the National Assembly. In fact, business leaders have expressed concerns over the government’s tightened control of companies in the name of fair trade for policy or political aims.
Let’s take a closer look at the abolishment of the FTC’s exclusive complaint right, which garnered partial agreement among the government and the ruling party. If the prosecution has the right to complaint and executes corporate inspections, poorly equipped with specialty in the economy, corporate images would be damaged severely, even with ending up innocent or with minor punishment. For such reason, many advanced countries take careful approaches to breaches of competition laws, which are dealt by specialized agencies.
The same goes for tightening of regulations on intra-group transactions. To be sure, companies should be restricted to deprive chances of transaction of non-affiliated firms, avoid taxes and circumvent inheritance laws by taking advantage of intra-group transactions. However, it should be considered that internal transactions of companies allow for efficiency, security and immediacy. Regarding intra-group transactions, tax avoidance or any other illicit activity should lead to strict punishment. There are few cases where such a business practice is subject to corporate sanction. Not the FTC or the prosecution but companies are to decide whether their transaction structure is solid and healthy. The issue of revising the Fair Trade Act should not be pushed for by the government and politicians. Rather than that, it is desirable to listen to companies, consumers and economic experts to adjust to the realities of the Korean economy.