▲ High-rise buildings housing major corporate offices stand in downtown Seoul.
The Fair Trade Commission (FTC) is pushing to file criminal complaints against conglomerate heads or corporate entities that repeatedly submit false designation data within a three-year period.
Regarding the submission of false designation data, the FTC is tightening its complaint criteria by including cases of significant gravity as a rule, regardless of the level of foreseeability.
The FTC announced on August 6 that it has prepared an amendment to the "Guidelines on Filing Complaints for Violations of Obligations to Report and Submit Data Regarding Enterprise Groups" and will put it up for administrative notice until August 26.
This amendment focuses on enhancing the effectiveness of sanctions against false submissions or refusals to submit data for the designation of enterprise groups subject to public disclosure.
The FTC operates the conglomerate designation system to curb the concentration of economic power.
Because designation data serves as the foundation of conglomerate policies, failure to be designated as a business group due to false data submission allows companies to evade equity investment regulations, debt guarantee restrictions, and rules against private interest tunneling, thereby enabling them to expand their control through expedient means.
Under the amendment, false submissions of designation data will, as a rule, be subject to criminal complaints when the gravity of the violation is remarkably high or when both the gravity and foreseeability are substantial.
Currently, complaints are filed as a rule only when foreseeability is remarkably high, or when foreseeability is substantial and the gravity of the violation is remarkably high.
Even if a violation was gravely serious, it had been excluded from criminal complaints if foreseeability was not clear.
The FTC explained that the move aims to strengthen responsibility and sanctions for serious violations.
However, the amendment allows for the possibility of withholding complaints if objective data proves that foreseeability was minimal, even if the gravity was remarkably high.
In addition, the amendment clarifies the complaint criteria for repeat offenders as "cases where the same violation is repeated within the past three years."
The current complaint guidelines do not have separate provisions regarding repeat violators.
Furthermore, the criteria for determining foreseeability and gravity concerning the omission of affiliates owned by the head (the same person) or affiliates owned by close relatives of the head have been specified by reflecting recent FTC adjudication precedents.
The amendment stipulates that cases where the head directly owns a substantial stake in a company omitted or falsely reported in designation data as examples of remarkably high foreseeability.
Cases where close relatives own substantial stakes in omitted or falsely reported companies are specified as examples of substantial foreseeability.
In addition, the amendment allows previous experience in submitting designation data to be taken into account when assessing foreseeability.
As for the criteria for assessing gravity, cases involving a large scale of omitted affiliates and a long omission period are cited as examples, even if they did not affect whether the enterprise group was designated for public disclosure.
Cases with a small scale of omitted affiliates and a short omission period were added as examples of minor gravity.
The FTC expects that the revised complaint guidelines will "effectively block the conglomerate family's expedient expansion of control and pursuit of private interests at an early stage."
Comments regarding the administrative notice can be submitted via the FTC website (www.ftc.go.kr).
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