South Korea's Prosecution Service is expanding criminal penalty reductions for companies that voluntarily report price-fixing. Companies that come forward first will be eligible for a conditional suspension of indictment, and the penalty reduction for second reporters will be widened. But the Major Crimes Investigation Agency has also decided to accept applications for criminal leniency — a program that reduces penalties for self-reporting participants — leaving the two agencies in a standoff over who administers the system and raising concerns that confusion over where to file could deepen.
The Prosecution Service revised its internal rules on the 16th of this month to strengthen protections for companies applying for criminal leniency, according to legal sources on the 25th. The agency said the change reflects experience accumulated since it began running the program in 2020, as well as difficulties raised by companies.
The biggest change is the introduction of a conditional suspension of indictment for first-in-line applicants. Previously, decisions were held off until trials of other companies involved in the cartel had concluded, leaving the reporting company in prolonged legal limbo. Under the revised rules, a company that meets certain requirements can receive a conditional suspension of indictment even before those trials end. The Prosecution Service said it will continue to verify compliance with cooperation obligations until the verdicts become final.
The agency also revised the standard for reducing penalties for second-in-line applicants. The reduction had been applied uniformly at 50%, but it will now range from one-third to two-thirds depending on the degree of cooperation with the investigation. Companies that cooperate actively will receive larger reductions, while those that fall short will receive smaller ones.
Against that backdrop, the Major Crimes Investigation Agency recently decided to accept criminal leniency applications as well. As with the Prosecution Service, filings can be made in person or by fax or email. The problem is that the two agencies have yet to conclude talks on which of them administers the program. As the Prosecution Service has pressed ahead since last year with large-scale cartel investigations in major industries including oil refining, petrochemicals and food, more companies have moved to report themselves — but it remains unclear which agency they must apply to in order to secure a reduced penalty.
Opinion within the legal community is divided. The Prosecution Service argues that because criminal leniency presupposes a prosecutor's decision to forgo indictment and to seek a lighter sentence, authority over the program rests with it. The Major Crimes Investigation Agency counters that the legal basis for reducing penalties lies in voluntary self-reporting, meaning investigative agencies can also accept applications.
"If companies can apply to the Major Crimes Investigation Agency for reduced penalties, that raises the complicated question of whether they can also apply to the police," one legal official said. "On the other hand, some argue it is more efficient for the Major Crimes Investigation Agency to take the filings, since judging whether a company has cooperated with an investigation is the role of the investigative agency."