-Rationalization of surcharge calculation criteria, stronger surcharges for repeated violations, and streamlining of mitigation grounds -
August 4, 2026
The Korea Fair Trade Commission (KFTC, Chairperson Biung-Ghi Ju) announced that the revised surcharge guidelines for the Fair Transactions in Subcontracting Act, the Fair Transactions in Franchise Business Act, and the Fair Agency Transactions Act will take effect on August 4.
The major revisions to the surcharge guidelines are as follows.
1. Rationalization of Surcharge Calculation Criteria
Surcharges are calculated based on either an amount obtained by multiplying the base amount prescribed under each relevant Act by a rate determined according to the nature and severity of the violation, or a prescribed base amount. However, concerns have been raised that surcharge levels remained low even for violations classified as serious, as the applicable rates and amounts were set at relatively low levels.
Accordingly, the rates and amounts used to calculate surcharges have been increased, and the levels of severity have been further subdivided to ensure sufficient deterrence against violations of the law.
In addition, in order to enhance the rationality of surcharge imposition in the franchise and agency sectors, certain provisions of the detailed assessment criteria used as a basis for determining the severity of violations have been improved.
2. Stronger Surcharges for Repeated Violations
To deter repeated violations, the maximum surcharge increase has been significantly strengthened. A single previous violation within the past five years may now result in a surcharge increase of up to 50%, while the surcharge may be increased by up to 100% depending on the number of previous violations.
In this regard, the revised Enforcement Decrees of the Fair Transactions in Subcontracting Act and the Fair Transactions in Franchise Business Act, which raise the maximum surcharge increase for repeated violations from 50% to 100%, passed the Cabinet meeting on July 28 and will take effect on August 4.
In addition, retaliatory measures taken by a business in response to a report to the KFTC or an application for dispute mediation are subject to an additional surcharge increase in consideration of the malicious nature of such conduct. In the agency sector, the surcharge increase has been raised from 20%, which was lower than the level applied in the fair trade and distribution sectors, to 30%. In the franchise sector, where there was previously no separate provision for increasing surcharges for retaliatory measures, a new legal basis has been established to allow surcharges to be increased by up to 30%.
3. Reduction and Streamlining of Mitigation Grounds and Scope
Previously, a business could receive a surcharge reduction of up to 10% for cooperating with the KFTC's investigation and an additional reduction of up to 10% for cooperating with the KFTC's deliberation, allowing for a total reduction of up to 20%.
Under the revised guidelines, however, a surcharge reduction of up to 10% will be available only when a business fully cooperates throughout the entire process, from the investigation through the deliberation.
The reduction available for voluntary corrective measures, which was previously as high as 50%, has also been revised. Considering that removing the effects of a violation is an inherent obligation of a business that has violated the law, a reduction of up to 10% will be available only when the business has substantially eliminated the effects of the violation.
In addition, the provision allowing for a surcharge reduction for violations committed due to minor negligence in the franchise sector has been deleted.
4. Other Amendments to the Provisions
Other provisions have also been revised, including replacing difficult legal terminology with easier-to-understand expressions and adding explanations where necessary. In addition, inconsistencies in spacing and terminology among provisions have been corrected to ensure consistency.
With these revisions, the level of surcharges imposed for unfair trade practices in the subcontracting, franchise and agency sectors will be substantially strengthened. The KFTC expects the revised guidelines to deter businesses from violating the law and contribute to establishing a fairer trading environment.