Concerns Over South Korea’s Antitrust Practices
U.S. businesses in South Korea contend that the country’s antitrust body is being used as a political instrument, unfairly targeting them while safeguarding local enterprises. This perspective comes from a report by the National Bureau of Asian Research (NBR), released recently.
The 50-page document, titled “On the Impact of KFTC Enforcement on U.S. Companies,” indicates that the Korea Fair Trade Commission (KFTC) engages in enforcement actions that seem protectionist and deviate from established international standards. Nigel Cawley, a non-resident fellow at NBR, based his findings on confidential interviews with U.S. executives who described a regulatory landscape as “unpredictable, politicized, and anti-regulatory.”
Concerns About Enforcement Tactics
The report highlighted that the KFTC frequently initiates investigations with scant evidence, conducts unscheduled “dawn raids” on company facilities, and threatens criminal charges against employees who refuse to comply with document requests. These methods, according to the study, foster a “climate of fear” that discourages investment, stifles innovation, and undermines the rule of law.
Some officials disclosed that investigators could occupy offices for extended periods, seizing confidential information and pressuring employees to sign statements before they could leave questioning sessions. Many firms noted that they faced investigations every two to four months, often correlating with intense political scrutiny from Congress. This ongoing scrutiny has left businesses feeling anxious, contributing to what the report describes as a “permanent compliance crisis.”
Despite South Korea’s efforts to enhance transparency through legal reforms in 2020, the NBR found that companies struggle to contest evidence before penalties are enforced, limiting their ability to defend themselves compared to counterparts in other developed nations.
Pattern of Discrimination
The study suggests that U.S. companies endure disproportionate investigation compared to their South Korean and Chinese counterparts. Executives expressed concerns over selective enforcement, noting that the same regulators apply similar scrutiny to local and Chinese firms. Although the KFTC denies discriminative practices, the NBR emphasizes that the combination of unclear procedures and political pressure generates an unfavorable climate for U.S. companies.
In a related report to the Office of the U.S. Trade Representative, industry groups used strong language, claiming that the KFTC is “weaponizing competition law” to oppress American firms while favoring domestic conglomerates, a notion supported by third-party feedback examined by NBR.
Wider Trade Implications
These revelations come as the Trump administration urges allies to dismantle perceived “backdoor protectionism.” Officials from the U.S. Trade Representative’s office are evaluating these findings as part of the 2026 National Trade Estimates Report concerning foreign trade barriers.
Previous submissions have criticized South Korea’s law enforcement as an anomaly for a close U.S. ally, emphasizing that the KFTC’s reliance on criminal threats could hinder necessary transparency for digital trade across borders.
According to estimates from the Competere Foundation, discriminatory practices could result in a cost of $525 billion to the U.S. economy over a decade, equating to a loss of about $3,900 per household, and costing $128 billion in U.S. exports related to digital services. They also predict similar impacts on Korean consumers and small businesses.
Seoul’s Regulatory Shift
President Lee Jae-Myung and KFTC Chairman Ju Byung-ki are proposing a robust regulatory approach for digital platforms. Their Online Platform Fairness Act, inspired by the European Union’s Digital Markets Act, aims to grant the KFTC new authority to regulate service fees and address dominant market positions.
However, the NBR cautions that this proposed legislation could formalize the unfair treatment reported by companies. Even as U.S. officials advocate for reconsideration on these issues, the report suggests that the KFTC likely will persist with its agenda despite domestic and international opposition.
The KFTC maintains that its enforcement is fair and applies similarly to both domestic and foreign firms, asserting that its actions are designed to protect consumers and ensure fair competition. Nonetheless, increased public discontent with large technology platforms, prominently foreign-owned ones, is amplifying political pressure for stricter oversight.
In closing, the NBR warns that unless South Korea establishes more robust transparency and procedural protections, its competition policies risk evolving into a non-tariff barrier. Such practices could significantly undermine essential economic partnerships, as the report highlights.
The report’s findings could draw increased scrutiny on U.S. allies at a time when Washington is striving to build a united front against economic nationalism in Asia. A recent statement emphasized the importance of maintaining equitable treatment for U.S. companies, to sustain strategic balance amidst China’s expanding economic might.
