▲ Fair Trade Commission (FTC)
The Korea Fair Trade Commission (FTC) has decided to abolish the cap on whistleblower rewards and offer up to 10 percent of the imposed fines to encourage more reports of unfair trade practices.
The FTC announced on Wednesday (June 17) that it has revised the "Regulations on Reward Payments for Reporters of Violations of the Fair Trade Act, etc." (Reward Notification), which will take effect starting tomorrow (June 18).
The revision removes the previous ceiling of 3 billion won on reward payments and eliminates the sliding scale where the reward rate decreased as the fine amount increased.
The FTC explained that by setting the reward rate at 10 percent of the fine, it ensures that whistleblowers can receive a sufficient reward when reporting cases involving large-scale fines.
To date, the largest reward ever paid was approximately 1.75 billion won, awarded in 2021 for a case involving scrap metal price-fixing by steelmakers.
Under the new rules, for example, if a whistleblower had provided top-tier evidence in the recently uncovered flour price-fixing case among milling companies, they could have received up to 67.1 billion won—10 percent of the total 671 billion won in fines.
With the significant increase in potential rewards, the FTC has also established a system to pay out rewards once the final legal status of the fines is determined.
Since litigation can delay the final payment of fines to the national treasury, the agency will now pay a base reward once the initial fine is paid to the state. The remaining balance will be paid once legal proceedings conclude and the final fine amount is confirmed.
The revision also expands the scope of recognized evidence for unfair support and self-dealing practices.
Proving illegal support or self-dealing—where a company or its owner family is unfairly favored—is difficult based solely on transaction terms, making the proof of "intent to support" crucial.
Because such intent is difficult to identify or prove from the outside, there is a particular need to encourage internal whistleblowing.
Consequently, while the criteria for determining reward rates previously only recognized information related to "transaction history" and "transaction terms," the scope has now been expanded to include information related to "intent to support" that is necessary to prove a violation.
Furthermore, to eradicate the misappropriation of technology—an area where reporting is difficult due to the power imbalance between companies—the government has established a basis to increase reward rates for those who cooperate organically and continuously with the FTC, such as through activities as a technology protection monitor.
Additionally, to prevent abuse of the system, the FTC has introduced provisions to reduce rewards if the whistleblower has failed to uphold social responsibilities.
Specifically, rewards may be reduced by up to 30 percent—the minimum necessary amount—based on the whistleblower's level of cooperation with investigations and their own involvement in the illegal activities, ensuring that the incentive to report remains intact.
An FTC official stated, "This revision is expected to revitalize internal whistleblowing regarding large-scale price-fixing and other violations. It will also serve as a deterrent against unfair trade practices by creating awareness among companies that any internal participant could report them at any time."
(Photo: Yonhap News TV, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.