The Fair Trade Commission announced that it is amending the regulations regarding the operation and evaluation of the ‘Compliance Program (CP)’ and will implement it starting from the 23rd. This amendment includes the simplification of the CP grading system, the introduction of a point deduction system for legal violations, and the elimination of the grade suspension system.
The Fair Trade Commission has simplified the existing six-tier grading system (AAA, AA, A, B, C, D) to a three-tier system of AAA, AA, and A, and named it the ‘CP Excellent Corporation Designation System.’ Accordingly, those with a grade of B or lower (less than 70 points) will be excluded from the official grading system. AAA is set for scores of 90 or above, AA for scores of 80 or above and below 90, and A for scores of 70 or above and below 80.
Incentives such as the exemption from official investigations granted to existing A-grade corporations will be abolished through this amendment, but will be temporarily maintained until next year, taking into account the grace period for the change of the system.
The Fair Trade Commission has also converted the automatic downgrading system due to violations of fair trade laws into a point deduction system with this amendment. In the future, evaluations will deduct a maximum of five points per violation, and the deduction measure will not apply to corporations applying for CP grade evaluation for the first time. However, if the evaluation committee determines there is a risk of reliability violation, grade downgrade or exclusion from excellent corporation designation may be possible.
The existing system that allowed for the postponement of grading for corporations for which review reports were presented has also been abolished. As a result, there will no longer be delays in evaluations while allegations remain unconfirmed.
Additionally, corporations that receive an excellent grade or higher in the Fair Trade Commission's compliance evaluation (in the fields of subcontracting, distribution, franchise, and agency) will be able to receive a maximum of 1.5 bonus points during the CP grade evaluation. The evaluation process will consist of three stages: step 1 document evaluation (including bonus points), step 2 face-to-face evaluation, and step 3 on-site evaluation.
A Fair Trade Commission official noted, “Through this regulatory amendment, we expect that the introduction and operation of CP will be revitalized, and that substantial evaluations will be conducted, spreading a culture of compliance with fair trade,” and added, “In the future, we plan to improve related systems and operate evaluations strictly so that CP can function more actively in corporate sites.”