[Column] Almighty Fair Trade Commission

Suh Kyoung-ho

The author is an editorial writer at the JoongAng Ilbo.

As a reporter, I have watched the Fair Trade Commission (FTC) for quite a long time. The FTC draws up policies and probes industries. The head of the watchdog dealing with fair competition under the Prime Minister’s Office attends the Cabinet meeting on economic affairs. It also serves as a semi-law enforcement agency to enforce probes into collusive business deals and unfair practices. That’s why it is called the “economic” prosecution having the authority to investigate and levy penalties on companies.

But FTC members dislike being addressed as “economic prosecutors.” They deny they are a law enforcement or regulatory agency. Still, they secretly take pleasure in their immense power. Under the Lee Myung-bak administration, the FTC behaved as the enforcer of price stability and symbiotic growth of big and small companies even without hiding its mighty power. Officially, they prefer to be called the defenders of fair trade. The FTC tried to strike a balance between its role as economic agency and another role as an economic law enforcement authority.

Prosecutor-turned-president Yoon Suk-yeol has defined the role of FTC clearly. While receiving a briefing on the policy outline for the new year from FTC in January, Yoon told its chief that the agency must act as a “judiciary institution” on economic affairs. The redefinition of the FTC — that it no longer is an economic agency but falls in the judiciary realm — astounded many people. In a rare move, the FTC chief made a briefing together with the Ministry of Justice and the Ministry of Government Legislation.

The FTC was founded as an economic agency in the beginning. It started out as an arm of the Ministry of Economic Planning in 1981 and became an independent member of the Cabinet under the Prime Minister’s Office in 1994. Two years later, the commissioner was promoted to the ministerial level. I don’t want to criticize the government for using the investigative power of the FTC in running the country. In the past, FTC officials had been dispatched to the offices of the senior presidential secretaries for economic affairs and civil affairs in the Blue House.

On the same day of the briefing by the FTC to the president, the justice ministry announced a plan to establish a bureau in the Supreme Prosecutors’ Office to look into antitrust cases. The ministry may have benchmarked the U.S. case where the Department of Justice’s Antitrust Division works together with the Federal Trade Commission.

Similarly, the prosecution has recently started an investigation on an alleged collusive bidding by furniture makers even without FTC request. The FTC’s exclusive authority to first investigate antitrust cases and refer them to the prosecution if necessary has been bypassed.

The FTC is partly at fault. It often sat on its exclusive right to file complaints on antitrust issues in order not to upset companies. Thanks to the FTC’s inaction, the prosecutor general could have the right to directly file charges on corporate unfair practices with the prosecution from 1996, not to mention the heads of the Board of Audit and Inspection, the Ministry of SMEs and Start-ups and the Public Procurement Service, all from 2014.

The “Redefined” FTC has acted fast and embarked on investigations on commercial banks and telecommunication companies for oligopolistic abuses. It sanctioned the union of construction under the militant Korean Confederation of Trade Unions (KCTU) and took actions during the cargo trucker strike. The watchdog meddling in labor union affairs can provoke controversy. The Sherman Antitrust Act passed in 1890 in the U.S. as the oldest antitrust law was applied to collective actions by labor unions. But the follow-up Clayton Act in 1914 exempted the union from the reach of antitrust regulations by stating, “The labor of a human being is not a commodity or article of commerce.”

The FTC launched investigations on commercial banks and telecom players without clear grounds and without much preparation. Banks and telecom companies are used to government meddling. In 2019, there was an accusation of price-fixing over soju. Soju makers claimed they acted on guidance from the National Tax Service, but the FTC ignored them, hitting them with a combined fine of over 200 billion won ($154 million). The sum was later sharply cut to 27.2 billion won. But even the penalty was entirely reversed at the Supreme Court. Although FTC was utterly defeated, senior officials who commanded the soju case already retired by then.

Article 1 of the Fair Trade Act defines the goal of antitrust law as “to regulate monopolistic practices to revive creativity and vitality of the economy.” The agency must not use the power to forcibly discipline private companies.