South Korea is expanding criminal penalty reductions for companies that voluntarily report cartels and other unfair trade practices. Companies applying for penalty reductions will now be able to receive a conditional suspension of indictment, and the scope of reductions for second-to-report companies will widen. The Public Prosecution Office said it aims to address corporate concerns about lingering uncertainty over punishment even after voluntary disclosure, and to encourage more self-reporting to help uncover illegal cartels.
According to legal sources on the 25th, the Public Prosecution Office revised its internal rules on the 16th to significantly strengthen protections for companies applying under the criminal leniency program, which reduces penalties for those who voluntarily report violations. Large-scale cartel investigations have continued across major industries including petrochemicals, oil refining and food products, prompting more companies to consider voluntary disclosure. But many have hesitated to actually come forward because of uncertainty over subsequent criminal punishment. The office revised the rules after hearing from companies and drawing on experience accumulated since the program began operating in 2020.
The biggest change is the introduction of a conditional suspension of indictment for companies that are first to apply for penalty reductions. Previously, decisions on first applicants were held in abeyance until trials of other companies involved in the same cartel case had concluded. Critics said this meant legal instability persisted until a final decision was issued, even for companies eligible for reductions through voluntary disclosure. A legal industry official said companies had faced a considerable burden because the legal status of first applicants remained unsettled until trials ended.
The Public Prosecution Office plans to resolve that uncertainty earlier by granting a conditional suspension of indictment to first applicants that meet certain requirements. Even after a decision is issued, however, the office will continue to verify whether the applicant is meeting conditions such as its duty to cooperate, until judgments in related cases become final.
Benefits for second-to-report companies will also expand. Penalties for second applicants were previously reduced by a uniform 50%, but reductions will now range from one-third to two-thirds depending on the degree of cooperation. Companies that actively help prove cartel allegations will receive greater benefits, while those offering insufficient cooperation will see smaller reductions. The change is designed to encourage substantive cooperation with investigations and to allow reduction levels to be set flexibly according to each company's contribution.
A new exception also allows companies to receive penalty reductions even when their executives and employees do not cooperate with investigations, provided certain conditions are met. Companies have long argued that even after deciding to report voluntarily, they cannot guarantee the cooperation of individual employees. Under the revised rules, if a company makes its best efforts to secure continued cooperation from its staff and provides sufficient evidence to prove cartel allegations despite non-cooperation by some employees, that can be factored into decisions on reductions. The measure is intended to prevent a company from losing its benefits entirely because of non-cooperation by individual employees.
The office also set up procedures to improve transparency and predictability in reduction reviews. It introduced a process of meeting directly with applicant companies before reduction decisions are made, and formally required that final decisions be communicated in writing. The aim is to let applicants confirm in documents both the outcome and their own legal status.
Meanwhile, the Serious Crimes Investigation Agency has also decided to accept criminal leniency applications, making the division of roles between the two agencies a new point of contention. Some argue that criminal leniency falls within the exclusive authority of the Public Prosecution Office, since the program presupposes prosecutors' power to indict and recommend sentences. The investigation agency, however, maintains that accepting voluntary reports is itself part of investigative work. How the two agencies will coordinate their authority over application intake and reduction decisions remains an open question.
A lawyer specializing in fair trade said the biggest concern for companies is what legal protection they can expect after voluntarily reporting a cartel. The revision, the lawyer said, should allow the cartel penalty reduction program to operate more stably under the new criminal justice system.