Korea Expands Criminal Leniency for Companies That Report Cartels

South Korea has strengthened its criminal leniency program for companies that voluntarily disclose cartels and other unfair trade practices, seeking to reduce the legal uncertainty that has discouraged businesses from reporting misconduct.

The Public Prosecution Office revised its internal rules on October 16 after hearing concerns from companies and reviewing the program's operation since 2020. The changes come as investigators pursue large cartel cases across sectors including petrochemicals, oil refining and food products.

The central change allows a company that is first to seek leniency to receive a conditional suspension of indictment when it meets the required standards. Under the previous process, a decision on the first applicant could remain pending until trials involving other participants in the same cartel had concluded. That left a cooperating company uncertain about its criminal exposure even after it had voluntarily disclosed the conduct.

The revised system is intended to give qualifying first applicants clarity earlier in the process. The suspension will remain conditional, however. Prosecutors will continue checking whether the company fulfills obligations such as cooperating with the investigation until judgments in related cases become final.

Second applicants will also face a more flexible system. Instead of receiving a uniform 50 percent reduction, they may now obtain a reduction ranging from one-third to two-thirds. The exact benefit will depend on the quality and extent of their cooperation. Companies that make a stronger contribution to proving cartel allegations can receive greater relief, while limited cooperation can result in a smaller reduction.

The rules also address cases in which individual executives or employees decline to cooperate after their company reports a cartel. A company may still qualify for a reduction if it made its best efforts to secure continued cooperation and supplied enough evidence to establish the alleged conduct. The change recognizes that a company cannot always compel every individual employee to assist investigators.

Prosecutors have introduced additional procedural safeguards as well. Officials will meet applicant companies before making reduction decisions, and final decisions must be delivered in writing. Those steps are designed to make reviews more transparent and allow applicants to confirm their legal position.

A separate institutional question remains unresolved. The Serious Crimes Investigation Agency has decided to accept criminal leniency applications, raising debate over how it will divide responsibilities with the Public Prosecution Office. Some legal observers argue that leniency is tied to prosecutorial powers over indictment and sentencing recommendations, while the investigation agency views the receipt of voluntary reports as part of its investigative role. Coordination between the two bodies will determine how consistently the revised protections operate.