How Korean antitrust fines are calculated — the formula behind '₩15 trillion'
Fines start from relevant sales times a gravity rate, then shrink through adjustments — headline maximums are ceilings, not predictions
The three lines
- The formula: relevant sales × gravity-tier rate, then aggravating and mitigating adjustments
- Bid-rigging and cartels rate as 'very grave,' capped at 20% of relevant sales since the 2021 reform
- Headline trillions are statutory ceilings — final amounts land far lower, adjusted for leniency and capacity
Key questions
- Could the treasury-case fine really be ₩15 trillion
- That figure is arithmetic, not forecast: ₩76.2tn in relevant sales times the 20% statutory cap. The real process runs through gravity-rate setting, two rounds of adjustment, and an ability-to-pay review, and final amounts typically land far below the ceiling. Trillion-won territory remains possible; the ceiling itself is not.
- What are 'relevant sales'
- The sales connected to the violation — the calculation's starting point and often its biggest battle. For bid-rigging, the principle is to use the contract (winning bid) amount, which is why the treasury case starts from the full ₩76.2tn of auction wins. It measures the size of the distorted transactions, not the profit made.
- What is leniency
- The self-reporting discount. The first cartel member to confess receives full immunity from fines; the second gets half off. Cartels rarely surface without an insider, so the system institutionalizes the incentive to defect first — and it is why final fines diverge wildly between firms in the same case.
"A fine of up to ₩15 trillion." The number in today's treasury-collusion story came from a journalist's calculator: relevant sales of ₩76.2 trillion times the statutory 20% cap. Actual fines almost never arrive at that arithmetic. This reference walks through how Korean antitrust penalties are really computed — and how to read headline trillions anywhere they appear.
1. A fine that is not a criminal fine
First, the concept. Korea's antitrust penalty (gwajinggeum) is an administrative surcharge, not a criminal punishment. The Fair Trade Commission — a regulator, not a court — imposes it, and it blends two purposes: clawing back illicit gains and deterrence. That is why the same case can produce both fines and criminal referrals, as the treasury case's examiners recommended — the two tracks run in parallel.
The computation starts from relevant sales: the revenue connected to the violation. This is where cases balloon or shrink, because everything downstream multiplies off it. For bid-rigging the principle is to use contract (winning-bid) amounts — so the treasury case starts from three and a half years of auction wins, ₩76.2 trillion. Note what that measures: the size of the distorted market, not anyone's profit. It is precisely the point the accused industry attacks as excessive.
2. The formula's five steps
| Step | What happens | Treasury case |
|---|---|---|
| ① Relevant sales | Violation-linked revenue set | ₩76.2tn in winning bids |
| ② Base fine | Gravity tier rate applied | "Very grave" — up to 20% |
| ③ First adjustment | Duration and repetition aggravate | 3.5 years — aggravating |
| ④ Second adjustment | Cooperation, self-correction, leniency mitigate | Confidential |
| ⑤ Final imposition | Ability to pay, market conditions | Set by commission decision |
Violations sort into three gravity tiers, and hard-core cartels — bid-rigging, price-fixing — almost always land in the top tier, "very grave." The 2021 full revision of the Fair Trade Act doubled the caps (cartels: 10% to 20% of relevant sales), which is what makes today's fifteen-trillion arithmetic possible at all.
Then come the discounts. Long or repeated violations aggravate; cooperation and self-correction mitigate. The decisive lever is leniency: full immunity for the first self-reporter, half off for the second. Most cartel cases begin with an insider's defection for exactly this reason — and it is why two firms in the same cartel can end up with wildly different bills.
3. What remains — how to read headline numbers
The summary is two lines. "Up to ₩X trillion" is steps ① and ② — a ceiling that measures the case's gravity. The real bill is what survives steps ③ through ⑤, historically a small fraction of the ceiling in even the largest cases. So read the headline number as a weight class, not a prediction, and wait for the commission's written decision for the truth. Today's case is in "A ₩76 trillion collusion case"; when the decision lands, this reference gets the final figures added to its table.