Seoul, South Korea – The Fair Trade Commission (FTC) announced today that it will revise its detailed guidelines for imposing fines on businesses that violate the Fair Trade Act regarding false advertising. The revised guidelines will come into effect on January 3, 2025.

The primary purpose of the revision is to enhance legal consistency by aligning the detailed criteria for imposing fines under the Fair Trade Act with the related provisions on the amount of relevant sales, the principles for calculating fixed fines, and the cooperation discount system.

Key Changes:

Calculation of Relevant Sales: Previously, when a violating business failed to provide sales data or did not possess such data, a fixed fine was typically imposed. However, the revised guidelines clarify the grounds for reasonably estimating sales based on objective data. Fixed fines will now be imposed only as an exception when sales cannot be estimated using such methods.
Maximum Amount of Fines: The guidelines have been adjusted to ensure that the maximum amount of a fine does not exceed a certain threshold. Specifically, the maximum amount of a fine will be calculated by multiplying the total sales during the period of the violation by the highest applicable fine rate based on the severity of the violation.
Cooperation Discount System: The requirements for obtaining a discount on fines for cooperating with the FTC's investigation and deliberation have been strengthened. Previously, businesses were eligible for a 20% discount if they admitted to the facts of the case and provided helpful information or testimony by the conclusion of the investigation and deliberation. Under the revised guidelines, the requirements for obtaining a discount for cooperation during the investigation and deliberation stages have been separated. Businesses will now be eligible for a 10% discount for actively cooperating with the investigation and an additional 10% discount for actively cooperating with the deliberation and admitting to the facts of the case by the conclusion of the hearing. However, to qualify for the discount, businesses must not only admit to the facts of the case but also cease the relevant conduct until the completion of the FTC's deliberation.
The FTC expects that these revisions will enable more objective and reasonable imposition of fines and enhance the effectiveness of law enforcement through the refinement of the cooperation discount system.