Fair Trade Commission’s Actions Restrained

A controversy is brewing over overly stern measures by the Fair Trade Commission (FTC) as some of the antitrust body’s recent decisions to impose fines on companies and file related complaints with prosecutors have been ruled as unfair and overboard.

Some point out that the government agency’s abuse of power could negatively affect the companies in question, and that they might have to suffer from years of legal and administrative disputes as well as tarnished images until they prove the illegitimacy of the FTC’s actions.

The Seoul Central Prosecutors’ Office ruled on May 27 that four oil refiners, SK Corporation, GS Caltex, Hyundai Oil Bank, and S-Oil, should be cleared of suspicions on price fixing of gasoline, gas oil, and paraffin oil in a case brought by the FTC in February this year on account of insufficient evidence. It did issue a summary indictment against SK Corp., GS Caltex, and Hyundai Oilbank on charges of collusive activities in gas oil price fixing.

The refining industry is preparing to file a protest and administrative lawsuit, saying that the 52.6 billion won in total fines imposed by FTC separately from complaints to prosecutors is too much.

Against this background, the prosecutors’ final decision is likely to have much influence on fine resettlement process.

Last month, the Supreme Court ruled against the FTC, which fined KT 30.1 billion won for unfair subsidies in 2001. The ruling returned 36.1 billion won in original fines and additional charges including interest to KT.

In administrative lawsuits brought by companies, the FTC is increasingly losing cases. The number of lost cases increased from 12.8 percent in 2004, to 17.8 percent in 2005, to 22.9 percent 2006.

It even sometimes failed to find evidence despite significant input of administrative power.

The commission recently closed investigations due to lack of evidence after two years of search for collusive links among four DRAM makers, including Samsung Electronics and Hynix Semiconductor. The FTC was criticized for its lax examination processes when a similar issue was raised in the U.S. two years ago.

Under the circumstances, the commission is reviewing revising laws and regulations on fines in order to adjust them to an adequate level.

ddr@donga.com swon@donga.com