Amendment and Implementation of the Detailed Standards for Imposing Fines under the Fair Labeling and Advertising Act

• Revision of standards for calculating related sales revenue and fixed fines, differentiation between investigation and deliberation cooperation, and enhancement of mitigation requirements -

The Korea Fair Trade Commission (hereinafter referred to as “KFTC”) has revised the Detailed Standards for Imposing Fines on Violators of the Fair Labeling and Advertising Act (hereinafter referred to as the "Fair Labeling and Advertising Fines Guidelines") and will implement the changes starting January 3, 2025.

 

The revised guidelines aim to enhance legal coherence by reflecting amendments made to the Detailed Standards for Imposing Fines under the Monopoly Regulation and Fair Trade Act regarding related sales revenue, fixed fine calculation principles, and the mitigation system for cooperation during investigations and deliberations.

Key Changes

1. Calculation of Related Sales Revenue
   Previously, when violators failed to provide or possess data on sales revenue, fixed fines were predominantly imposed. However, the revised guidelines clarify the basis for reasonably estimating sales revenue using objective data.
   
   If sales revenue cannot be determined even with these methods, fixed fines may still be imposed as an exception. However, such fines must not exceed the amount calculated by applying the highest fine rate—based on the severity of the violation type—to the total sales revenue during the violation period, assuming a proportional fine approach.
   
   
2. Revised Mitigation Requirements for Cooperation
   Under the current system, violators can receive a 20% reduction in fines if they both acknowledge the facts of the violation and provide information or testimony helpful in determining the illegality of their actions until the conclusion of KFTC’s investigation and deliberation.
   • Investigation Stage: A 10% reduction will be granted for active cooperation.
     
   • Deliberation Stage: A 10% reduction will be granted if violators actively cooperate during deliberation, acknowledge the violation until its conclusion, and cease the infringing activity during this period. The revised guidelines strengthen these requirements by ensuring acknowledgment and cessation of the violation.
3. Moving forward, the mitigation requirements will be separated for investigation and deliberation stages:

Expected Outcomes

This amendment aims to enable more objective and reasonable imposition of fines while enhancing the effectiveness of law enforcement through refined cooperation mitigation standards.