This is due to the amendment to the Enforcement Decree of the Act on Monopoly Regulation and Fair Trade that passed the National Assembly review in June last year, the effective date of which was set as June 21 this year.

Article 120(2) of the amended Fair Trade Act states that the KFTC can take corrective measures, reduce penalties, reward, and support businesses (companies) that have received CP evaluation in accordance with the standards set by the Presidential Decree to promote CP.

In particular, Korean CP experts have expressed that "the results are encouraging" over the provision of up to 20% penalty reduction in the KFTC's legislation draft.

When looking at incentives provided to companies in major countries around the world that have CP systems in place, no other country has reduced fines by up to 20%.

As such, the Korean government has shown its determination to encourage and induce companies to adopt CP by operating a wide range of penalty reduction incentives to implement internal compliance systems.

Specifically, the UK reduces fines by up to 10% if a company demonstrates that its CP activities were appropriate.

Italy provides a 15% penalty reduction for effective CP operation, 10% for CP that is not manifestly inadequate, and 5% for inadequate CP that is corrected within six months.

The US law stipulates that CP operations and efforts to prevent recurrence may be taken into account in determining the level and reduction of penalties during the sentencing phase for companies found guilty of unfair trade acts.

What are the criteria for receiving the 20% penalty reduction in Korea? Korea plans to adopt a penalty reduction rate of 10% to 20%, which is significantly higher than that of other foreign countries.

To be eligible, companies need to meet the requirements for adopting the CP as notified by the KFTC and have operated a CP for more than one year.

Then, the company must apply with the necessary documents and receive the KFTC's CP evaluation.

The actual CP operation evaluation will be conducted by an evaluation agency designated and delegated by the KFTC, or an organization that has been engaged in fair trade-related certification and evaluation business for more than 2 years.

According to the KFTC's incentives for CP implementation and operation, such as the reduction of fines, companies with a CP rating of A or higher can receive a reduction of the corrective action order once within the period of two years.

The size and number of media requirements for publicizing the corrective action will be reduced by one level for companies rated as AA and A and by two levels for companies rated as AAA.

The period for mandatory publication of corrective measures in workplaces and electronic media will also be reduced.

The reduction in fines will be capped at a maximum of 20%.

Companies with AA ratings will receive a 10% reduction and AAA ratings a 15% reduction in the second adjustment phase of a single penalty notice within the 2-year validity period.

Companies that demonstrate that they have identified and stopped the violation of the law through CP operations before the start of the investigation can receive an additional 5% reduction in their fine.

Also, new conditions were set for not applying the corrective orders and penalty reductions.

As the penalty reduction benefit that was abolished was reintroduced with the amendment, the exclusion requirement was also revived to apply the corrective order and penalty reduction benefit more strictly, according to the KFTC.

The exclusion requirements apply when the person in charge of the CP is found to have participated in the violation of the law, the violation of the law occurred before the introduction of the CP, the violation is an unfair collaborative act, or the director or senior executive is directly involved in the violation.