Case-handling procedures in the KFTC Hyungbae Kim Director for Audit and Inspection Korea Fair Trade Commission

contents Regulations on case-handling procedures Details on case -handling procedures Enhancing fairness and transparency in case-handling procedures

1. Regulations on case-handling procedures

1.Types of regulations Monopoly Regulation and Fair Trade Act and Its Enforcement Decree Regulation on Operation of Meeting and Case-handling Procedures

2. Governing rules of regulations Basic rules : stipulated in the Act and its enforcement decree - Chapter 9 (enforcement agency) and 10(investigation procedures) Technical and Detailed rules : stipulated in the case-handling procedures regulation

2. Details on case-handling procedures

Case-handling order 1. Origin of the case 2 Case-handling order 1. Origin of the case 2. Investigation(examination) 3. Deliberation and decision

1.Origin of the case The KFTC can investigate cases ex officio where there is a suspicion of violation against the competition law. Any person who believes that violation of the law has occurred may submit complaints to the Commission.

cont’d If the KFTC detects unlawful anticompetitive activity or receives a complaint concerning such activity, it conducts a preliminary examination to decide whether the case is subject to an investigation by the KFTC.

cont’d Unless the preliminary examination finds the case fits into such occasions where it is not subject to KFTC enforcement or the complainant withdraws the complaint, the KFTC launches full-phase investigation (examination) into the case.

2.Investigation (examination) The investigation officers from the KFTC may conduct on-site investigation at an office or business place of the relevant company or business association to examine their business and management status, account books, documents and others, and take statements from the parties subject to investigation or interested parties.

cont’d Also, the examiner may order the concerned company, business association or their executives to submit documents or other materials deemed necessary for the investigation and detain them.

cont’d In the case of finding violation and corrective measures such as corrective order and surcharge are considered necessary, the examiner files an Examination Report with the Commission. The Report shall be served to the defendant as soon as it is submitted to the Commission.

cont’d The report shall include overview on the case, structure and condition of relevant markets, factual statement of committed act and its anti-competitive effects, the examiner’s suggestions on the measures to be taken against the violation and other relevant documents as attachment.

3.Deliberation and Decision Types of committee - Full committee is composed of 9 commissioners and voted by majority rule. - Sub committee is composed of 3 commissioners and voted by unanimous rule.

Jurisdiction of each committee - Full committee : cases of significant economic impact, re-hearing cases, and cases on which resolutions have not been made in a sub committee or which it has decided to refer to a full committee. - Sub committee : other cases which are not handled by full committee.

Procedures of hearing are similar to those of public trials, which proceed in the presence of an examiner(s) and a respondent(s). The proceedings involve identification questioning, opening statement, interrogation, the examiner’s suggestion on the corrective measures, closing statement.

Order of hearing ① The chairman declares the opening of a hearing and identifies the involved parties. (Identification questioning).     ② After the examiner outlines the Examination Report, the respondent(s) replies to the examiner’s report (Opening statement).   

③ Commissioners question the examiner and cont’d   ③ Commissioners question the examiner and the respondent(s) on relevant facts to verify anti-competitive effects (Interrogation).     ④ The examiner states its suggestion as to corrective measures against the defendant.   ⑤ The respondent(s) makes a final statement on the suggested corrective measures of the examiner(Closing Statement).

Types of Decision - Cease and desist order - Public announcement - Administrative fines(surcharge)  

- Accusing legal and/or natural person(s) to the prosecutor’s office cont’d Types of Decision - Accusing legal and/or natural person(s) to the prosecutor’s office - Warning - Free of charge  

Appeal against the Decision (1) Filing for re-hearing & suspension of enforcement   A respondent who is dissatisfied with the decision may file a request for re-hearing to the KFTC within 30 days from the receipt of the written decision

Appeal against the Decision cont’d Appeal against the Decision As this procedure is optional, the person may directly appeal the decision to the court. The KFTC shall hold a new hearing and make a decision within 60 days, but it can extend the decision-making period up to 30 days.

Appeal against the Decision (2) Filing a lawsuit   In the case where the person wants to file an appeal to the appellate court, the person shall file a lawsuit to the Seoul High Court within 30 days from the receipt of a written decision or re-hearing result.

3. Enhancing fairness and transparency in case-handling procedures

1.Functional Separation The KFTC consists of - the Committee, which is a decision-making body, and - the Secretariat, the body responsible for investigation and indictment.

The Committee - nine commissioners(5 standing and 4 non- standing commissioners). - no jurisdiction over investigation process - conducting hearing and deliberation on case and making final decision.

The Secretariat - hierarchical organization by Secretary General - in charge of investigation and drafting and filing of Examiner’s Report to the Committee. - 6 bureaus and 5 regional offices conducting investigation.

2. Ensuring transparency in investigation Prior notification of investigation - In the case of on-site investigation at the place of business, investigator(s) shall give advance notification in writing informing the respondent of purpose, period and place of the investigation.

Prior notification of investigation cont’d Prior notification of investigation - The investigation shall be carried out within the purpose and period set forth in that notification. - The investigator shall show the concerned person a certificate indicating his/her authority for the investigation.

Prior notification of investigation cont’d Prior notification of investigation - When ordering the respondent(s) submitting documents or materials necessary for the investigation, a written order for the submission shall be sent to the company.

3. Ensuring fairness and transparency in hearing process Opportunity to submit opinions - Upon the filing of an examination Report to the Committee, the Examiner should serve it to the respondents as well and give them sufficient time to reply to the report. - The replies shall be submitted in written form.

Opportunity to submit opinions cont’d Opportunity to submit opinions - When serving the Report, confidential information on the respondent(s) may be excluded. - In such case, the respondent(s) may request the permission from the committee to read or copy the excluded documents.

Adversarial proceeding of hearing - The KFTC adopted adversarial proceedings where the examiner and the respondent are given the same status and equal opportunity to present oral arguments on the committed act and its anti-competitiveness.

Adversarial proceeding of hearing can be cross-examined. cont’d Adversarial proceeding of hearing - The respondent and the examiner may request an examination of evidence, presence of witness or competition law experts as a witness to seek their opinions. - In such case, the witness can be cross- examined.

Disclosure of hearing process and decision - Disclosing the process of hearing and decision is an important tool to ensure transparency as the third party as well as an interested person can keep track of all the decision-making procedures .

Disclosure of hearing process and decision cont’d Disclosure of hearing process and decision - Therefore the hearing process and decision of the KFTC is made public in general. - But it may not be the case if there is a need to protect confidential information on the respondent(s).

Sufficient opportunity for expressing opinions - The KFTC provides the parties concerned sufficient opportunity through preparatory hearing process or extended hearing system to express their opinions orally as well as in writing.

Preparatory hearing process - The chairman of the committee, if necessary for efficient, may allow preparatory hearing process to be conducted.

Preparatory hearing process cont’d Preparatory hearing process - During the preparatory session, main issues and evidence are reviewed thoroughly enabling the respondent to clearly understand arguments of the examiner and to express opinions on them.

Preparatory hearing process cont’d Preparatory hearing process - It makes the overall hearing process more efficient, since the issues on which the two parties reach an agreement can be excluded from the hearing.

Preparatory hearing process cont’d Preparatory hearing process - For example, the case of Intel’s abuse of market dominance (2008) came to a conclusion through only two rounds of hearing, because the contentious issues were reviewed in the two written opinion exchanges and one round of preparation process.

Extended hearing system - Hearing can be extended to the next round, if the case is found hard to produce the resolution in just one round of hearing. - Hearing can also proceed to the next round at the request of the respondent(s).   

Extended hearing system - For instance, the cases of Microsoft’s abuse cont’d Extended hearing system - For instance, the cases of Microsoft’s abuse of market dominance (2005) and Qualcomm’s abuse of market dominance (2009) went through seven and six rounds of hearing respectively.

Protection of confidential information - The respondent(s) may present written statements which specify the scope of the confidential information and desirable measures for its protection at least five days prior to the opening of the hearing.

Protection of confidential information cont’d Protection of confidential information - If the request is accepted, necessary measures will be taken, for instance, ordering other defendants to leave the room temporarily while the protected information is presented to the Committee.

Protection of confidential information cont’d Protection of confidential information - The information regarded as confidential is excluded from the disclosed decision docket later on. - Also hearing can be conducted separately for each respondent in the case where there is a need to protect identity of leniency.

4. Decision disclosure and Case-handling time limit Disclosure of the KFTC determination - Any person can access decisions of the KFTC through its website. - In principle, the disclosed decision does not include personal information and confidential business information.

Time limit for case-handling - The time limit required for investigation or case handling process is not set in the law, except for merger review and a re-hearing case. - Merger review : The decision shall be made within 30 days from filing of a merger notification and can be extended up to 90 days.  

Time limit for case-handling - Rehearing case : The decision shall be made within 60 days from filing and can be extended up to 30 days. -  If five years or more have passed since violation of the law, the KFTC shall not take any measures against the offence.

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