The Korea Fair Trade Commission (“KFTC”) has started enforcement of the amended Cartel Leniency Guidelines ("Guidelines”) on June 10, 2021.
1. Second-ranked cartel leniency applicants are guaranteed leniency by the amount proportionate to their level of contribution in the investigation.
Under the Guidelines, if the first-ranked leniency applicant is not granted leniency, the second-ranked applicant will automatically succeed to the first-ranked leniency position. Under the previous Guidelines, the succeeding second-ranked applicant that did not satisfy the stricter leniency requirements for first-ranked leniency status would be disqualified, in which case, the applicant would even lose the benefits for the second-ranked status.
Specifically, when the first-ranked leniency applicant lost its position due to its own fault (e.g., bad faith cooperation, continuance of cartel activity, coercion of cartel activity) after having already submitted a significant amount of evidence to the KFTC, the second-ranked leniency applicant was left unable to meet the requirements for first-ranked leniency status because, in order to be granted first-ranked leniency status, the KFTC must not have secured sufficient evidence to prove the alleged cartel at the time of application.
Under the amended Guidelines, in the event the first-ranked leniency applicant is disqualified for leniency, the second-ranked leniency applicant may be (1) qualified as the first-ranked applicant if it satisfies the requirements for first-ranked leniency status; or (2) qualified as the second-ranked applicant if it does not satisfy the requirements for first-ranked leniency status but satisfies the requirements for second-ranked leniency status.
2. “Amnesty Plus” procedures have been clarified.
The “Amnesty Plus” system means that: if a company that is under investigation and will be sanctioned for Cartel A discloses Cartel B first, it will get leniency for not only Cartel B but also Cartel A if certain thresholds are satisfied.
The previous Guidelines were unclear as to when the leniency application had to be submitted for Cartel B and the standard for reduction of fine available for the leniency applicant.
The amended Guidelines make clear that the leniency applicant must apply for leniency for Cartel B “after the earlier of the date of commencement of the KFTC investigation of Cartel A or leniency application by another company for Cartel A” and “before the KFTC hearing date for Cartel A.”
3. Scope of leniency application supplementation has been limited.
A leniency applicant may initially file a leniency application containing limited information on the cartel and, subsequently, supplement it within a certain period of time. In this regard, if another company is added as a leniency applicant or a separate cartel activity is added during the supplementation period, there was uncertainty whether such an addition would be permitted.
Under the amended Guidelines, the leniency applicant may add another company as a leniency applicant during the supplementation period if the company controls or is controlled by the leniency applicant and, in such a case, the company is deemed to have jointly made a leniency filing at the time when the initial leniency filing was made.
In addition, a separate cartel activity added during the supplementation period is not deemed to have been disclosed at the time when the initial filing was made. Instead, a new application for leniency is deemed to have been submitted for a separate cartel.