The South Korean Fair Trade Commission (KFTC) has come under scrutiny for its leniency in reducing penalties for repeated unfair business practices by companies. According to a recent audit report by the Board of Audit and Inspection, in a span of three years, the KFTC reduced a total of 258.3 billion won in fines from a substantial 1.3 trillion won imposed for 144 instances of unfair cooperative behavior. The audit highlighted the inadequacies in the KFTC's self-reporting regulations, which allow companies to create new subsidiaries to evade penalties even after committing similar offenses repeatedly.

The KFTC's current regulations state that a company providing the first evidence of unfair joint activities can have its fine waived, with a partial reduction available for providing evidence subsequently. However, the audit found that firms taking advantage of this provision, particularly through creating new companies that lack prior penalty records, could still escape fines. This loophole has been a point of concern, as it allows companies to persist in unethical practices without facing appropriate penalties, undermining efforts to promote fair competition in the market.

In specific instances cited, some companies successfully obtained significant reductions in fines despite having a history of misconduct by leveraging the law's wording. For example, a conglomerate recently claimed joint relief for subsidiaries that were part of a repeated pattern of unfair practices, leading to a total fine reduction of 54.55 billion won, simply because they were newly formed and had not previously been penalized. The findings from the audit call into question the effectiveness of the KFTC's oversight and suggest that reforms may be necessary to close these legal loopholes and ensure fairer compliance with competition laws.