Starting with five major domestic entertainment companies (HYBE, SM, YG, JYP, Starship) that used outsourced services solely through verbal agreements without contracts, to Broadcom, which is accused of forcing domestic manufacturers to use only their products. There is an increasing number of cases turning to 'consensual resolution' before facing penalty surcharges and fines from the Fair Trade Commission.
Consensual resolution is, simply put, a system that allows for leniency if an entity that has violated the law writes a letter of reflection and corrects its wrongdoings. While some criticize this as favoritism towards corporations, from the government's perspective, it has the advantage of avoiding long-term administrative litigation and can conclude cases in a timely manner, leading the Fair Trade Commission to welcome the procedure.
According to the Fair Trade Commission on the 28th, after applying for consensual resolution this year and recognizing the validity of their self-improvement plans, there have been three instances (five entertainment companies, Kakao, Broadcom) that have gone through the stakeholder opinion collection stage. Since the program started in earnest in 2014, it had only seen 0 to 2 cases annually, but even before four months of this year had passed, many more corporations than usual have begun this process. Additionally, Google, which is under investigation for the suspicion of 'forcing YouTube Music,' has also applied for consensual resolution.
Consensual resolution is a system whereby a business accused of violations can avoid penalties if it provides valid measures to compensate consumer harm. It was introduced to complement the limitations of existing measures such as corrective orders and penalty surcharges.
Although the number of corporations seeking consensual resolution has increased, the Fair Trade Commission is also actively utilizing this approach recently. On the 24th, the Fair Trade Commission confirmed a consensual resolution proposal for four convenience store companies (GS25, CU, 7-Eleven, Emart) that had excessively charged their own fines for not delivering products on time. According to the consensual resolution plan, the four convenience stores agreed to reduce the fines, which were at a level of 20-30% of unpaid amounts, to a level of 6-10% similar to large discount stores, and to provide 3 billion won in funds to support their suppliers.
One advantage of consensual resolution is that there is a low possibility of leading to lawsuits. The Fair Trade Commission’s win rate in related lawsuits is around 90%. However, as seen in the Hoban Construction case, where only 243 billion won was recognized out of a penalty surcharge of 608 billion won, lawsuits are not necessarily easy.
Additionally, the SPC Group, which was ordered to pay a penalty surcharge of 64.7 billion won for unfair support to affiliates, and Coupang, which was fined 3.297 billion won for shifting the losses from its lowest price policy onto suppliers, won their cases against the Fair Trade Commission in the Supreme Court last year. When penalty surcharges are refunded, the state must pay 3.5% interest on the principal.
A Fair Trade Commission official noted, "If a corporation contests the commission's penalties through administrative litigation, the illegal state could prolong. If there is a determination that it is necessary to process as quickly as possible, there is a high likelihood that the consensual resolution procedure will be initiated."
Considering corporations that conduct business not only domestically but also in various countries overseas, consensual resolution has its advantages. Cases that are also submitted to the U.S. Federal Trade Commission (FTC) or the European Union (EU) Commission require the Fair Trade Commission to pay attention to the severity of sanctions imposed by foreign competition authorities. However, consensual resolution is free from this concern as the corporations themselves prepare the self-improvement plans.
However, not all corporations can go through the consensual resolution procedure. It is only possible when the Fair Trade Commission recognizes that the business's consumer harm relief or restoration measures are adequate. A mere show of a letter of reflection could result in the Fair Trade Commission rejecting the proposal.
Kakao Mobility is a representative case. In 2023, Kakao Mobility was investigated by the Fair Trade Commission for allegedly blocking calls for taxis that subscribed to competitors' call services. In response, Kakao Mobility applied for the initiation of a consensual resolution, promising not to block calls and to provide general calls to taxi drivers from the competitor Uti, but the Fair Trade Commission rejected this. Ultimately, Kakao Mobility was fined 15.1 billion won.
Even in cases where the law is clearly violated and penalty surcharges are expected to be in the billions, the Fair Trade Commission does not proceed with the consensual resolution process. A Fair Trade Commission official explained, "If the acts constitute serious and clear violations subject to (prosecution) allegations, consensual resolution will not be accepted."
Meanwhile, recently Google also applied for consensual resolution from the Fair Trade Commission in relation to the suspicion of 'forcing YouTube Music.' The Fair Trade Commission determined that Google increased its market share by bundling the sale of YouTube Premium, a service allowing ad-free video viewing, with YouTube Music access. The Fair Trade Commission stated, "We are in discussions for a consensual resolution with Google," while warning against the market interpreting that the procedure has been initiated.