[비즈한국] Companies sometimes make decisions that are difficult to explain by money alone. Understanding the laws and regulations hidden behind them can help you grasp the deeper details. 'Useful Business Tips (Useful Business Law)' introduces insights to help understand business flows.
Even ordinary people can face sanctions for violating regulations while performing their duties at work. Some actions, such as embezzlement or breach of trust, intuitively feel like they would be subject to criminal punishment. However, it is generally difficult to fulfill all obligations under the various administrative laws that spread like a spiderweb, or to predict their existence in advance.
The same applies to obligations under Fair Trade laws. Many employees feel it is awkward for the state to intervene in private transactions to determine whether the law has been violated. It is common to react to Fair Trade violation issues by asking, “How can this be a problem?” People are often surprised to learn that work methods they performed out of habit could be judged as violations, causing immense losses to the company or potentially leading to their own criminal prosecution.
For example, discussing unit prices with a competitor after an invitation to bid has been posted constitutes collusion. This is something anyone can intuitively expect. However, it is difficult to know that the following actions can also constitute collusion: △ discussing subjects that could serve as a basis for unit price calculations with a competitor, △ deciding whether to participate in a bid after testing the reactions of competitors, or △ participating in the discussion process to acquire information without any intention of fulfilling an agreement.
In the past, the acts listed above might have been praised as being "proactive" or "responsive." However, as decisions by the Korea Fair Trade Commission (KFTC) and court precedents accumulate and laws are amended, the scope of what is considered a violation has broadened, leading to frequent cases where working in the old ways causes trouble.
The responsibility of management is even heavier. In a case where sales executives and team leaders engaged in continuous price-fixing through meetings, the Supreme Court recognized the CEO's personal liability for damages on the grounds that the CEO failed to fulfill their duty to monitor and supervise the company's overall operations, thereby intentionally turning a blind eye to the price-fixing or, at the very least, failing to exercise any caution regarding the possibility of its occurrence.
Because managers are not practitioners, they may not have executed the acts themselves, and may not have even been involved in decision-making as they were not in the relevant department, yet they still bear legal responsibility for failing their duty to monitor and supervise. When consulting on such matters, stakeholders often complain in frustration, saying things like, "If I'm going to be treated this way, I'd rather not work at all," or "It's unfair to be painted as a bad person when I was just working hard for the company."
However, such reactions are irresponsible. In any case, shouldn't one find a way to minimize the potential for violating regulations while handling company work? For example, if management expresses a policy commitment to regulatory compliance, distinguishes between compliant and non-compliant behavior through system construction or the establishment of guidelines, and educates staff on these points in advance, couldn't rapid and efficient work coexist with regulatory compliance?
From this perspective, a field that has been actively researched and implemented in the fair trade sector recently is the 'Compliance Program (CP).' The CP system refers to an internal compliance system that a company (business operator) creates and operates on its own to adhere to fair trade laws and regulations, which includes education and supervision.
The CP system was introduced in 2001 under private initiative, so the concept itself is not new. Nevertheless, discussions on the CP system have recently become active. The reason is that while the basis for the CP system was previously defined in internal guidelines, making the incentive effect of its adoption unclear, the amended Fair Trade Act that took effect on June 21, 2024, has legalized incentives such as fine reductions for the adoption and operation of a CP, allowing for more concrete expectations of benefits. Perhaps that is why the number of companies applying for CP ratings in 2024 more than doubled compared to the previous year (to 58), and about 66% (38) of all applicant companies reportedly received a rating of AA or higher.
According to recent fair trade laws and KFTC notices, a business operator that has met the requirements for CP adoption and operated the system for more than one year can apply for a CP rating to the Korea Fair Trade Mediation Agency. The agency then conducts a primary document review and a secondary on-site evaluation according to the criteria notified by the KFTC, and then publishes the rating.
The evaluation items include: ① establishment and operation of CP work standards and procedures, △ establishment and operation of an internal monitoring system, △ CP-related education, △ creation and use of a CP manual, △ disciplinary actions against employees who violate the law, and △ operation of personnel systems such as appointing CP officers. Ratings are classified as D (very insufficient), C (insufficient), B (average), A (relatively excellent), AA (excellent), and AAA (best). Depending on the situation, ratings may be withheld/not granted, or subjected to post-adjustment or invalidation.
The most important aspect is the incentive for the CP. If a business operator that meets the CP requirements and has operated it for over a year receives a rating of AA or higher, they can receive a fine reduction of 10% (for AA) or 15% (for AAA) once within the validity period (2 years). Furthermore, if the operator proves that they detected and halted the legal violation through effective operation of the CP prior to the commencement of an investigation, an additional reduction of 5% is possible, allowing for a total reduction of up to 20%.
Given these details, there would be no reason for a business operator not to apply for a CP rating. Additionally, preparing for a CP application would certainly have the effect of directly or indirectly refining the company's systems to minimize the possibility of regulatory violations.
However, this also raises some questions and concerns. First, as evidenced by the fact that the CP was introduced in 2001, CPs existed in the past, yet violations of fair trade laws occurred constantly, suggesting that the CPs were operated only formally. The amended regulation makes incentives for the CP official, but are there any means to ensure the substantive operation of the CP?
Second, operating a CP requires enormous costs. Large companies have the capacity to support this, but small and medium-sized enterprises (SMEs) do not have the capacity, regardless of whether they recognize the problem or not. Are there any measures to bridge this gap?
The vitalization of the CP is welcome in that it minimizes uncertainty in corporate operations. However, since the aforementioned questions can be raised, it is important to exercise finesse in operation to ensure the substantive implementation of the CP and to bridge the gap between business operators.