Understanding the Impact of KFTC Enforcement on U.S. Firms
Qualitative Evidence and Analysis

As the Trump administration continues to highlight non-tariff barriers against U.S. firms as a policy priority in trade negotiations, the discriminatory use of competition policy against U.S. firms has emerged as a priority issue. The administration’s stance reflects growing concern that U.S. adversaries and allies alike are using competition laws and enforcement actions—once narrowly focused on consumer welfare and market efficiency—as tools of economic statecraft and industrial policy to target U.S. firms. While countries retain the sovereign right to regulate both domestic and foreign companies and to enforce their competition laws, targeted or politically motivated actions by competition authorities undermine the rule of law, distort markets, violate international trade obligations, and inhibit innovation and economic growth.

Among these authorities, the Korea Fair Trade Commission (KFTC) stands out for the scale and nature of its enforcement actions against U.S. firms. Even when compared with other active regulators, such as the EU Directorate-General for Competition, the KFTC’s approach has raised significant concerns among U.S. and other foreign firms. Although KFTC-proposed legislative initiatives—such as the Platform Competition Promotion Act, which is modeled on the European Union’s Digital Markets Act—have not yet been enacted, the agency’s enforcement practices are aggressive, discretionary, and at times apparently arbitrary. The KFTC’s approach has been problematic for several years. It prompted the first-ever Korea-U.S. Free Trade Agreement (KORUS) consultations in 2019, underscoring U.S. concerns that the commission’s actions amount to a non-tariff barrier to trade under KORUS.[1] The KFTC’s practices also show a pattern of alignment with the type of barriers identified in the Trump administration’s reciprocal trade memo.[2]

The KFTC’s actions do not occur in isolation. They reflect a broader South Korean policy perspective that views competition policy primarily as a domestic tool, with limited regard for international trade obligations. South Korean policymakers, including members of the National Assembly and among KFTC leadership, reject claims of protectionism, arguing that foreign and domestic firms are treated equally. However, interviews with U.S. firms reveal that the practical effect of KFTC enforcement has been disproportionate scrutiny of U.S. firms, raising questions about de facto discrimination and the politicization of competition policy.

To assess the scope and impact of the KFTC’s actions, the National Bureau of Asian Research (NBR) conducted a series of interviews with several U.S. firms that have been subject to multiple KFTC investigations. These firms span a range of sectors and scales of operation in South Korea, with some holding significant market share, while others are smaller participants. All reported recurrent, burdensome, and unpredictable actions, reinforcing concerns about the KFTC’s transparency, proportionality, and adherence to South Korea’s international commitments and best practices for the enforcement of international competition policy.

Each interviewed firm reported distinct experiences with the KFTC. Some faced multiple investigations on an almost regular cadence, while others encountered more occasional scrutiny. Firms also varied in their engagement strategies. Some proactively shared information to help build the KFTC’s understanding of emerging technologies and market and competition dynamics, while others adopted a more cautious, defensive posture.

Despite these differences, all firms expressed common concerns regarding the KFTC’s investigative practices. Recurring themes included the following:

• A low threshold for opening investigations
• A lack of details and transparency about the specific alleged misconduct and the associated theory of harm
• Unnecessarily aggressive investigative tactics and raids
• Overly broad information requests and data seizures
• The frequent use of (or threats to use) criminal referrals as an enforcement and intimidation tool

Taken together, these practices convey a pattern that firms widely perceived as protectionist in effect, if not in intent. Interviewees cited media, political, and institutional pressures that incentivize the KFTC to pursue high-profile actions against U.S. tech firms. These pressures overlap with industrial policy objectives aimed at promoting Korean tech firms and products and reducing perceived foreign dominance. U.S. firms also emphasized that the KFTC’s technical and market understanding often lags the industries it regulates. Many KFTC officials and third-party expert advisers reportedly lack deep legal or technological expertise, leading to oversimplified and mistaken assessments of complex digital business models and competition dynamics. This knowledge gap, coupled with strong political and media incentives, has fostered a regulatory enforcement that U.S. firms view as unpredictable, politicized, and tilted against them.

Interview findings indicate that the KFTC’s enforcement practices are clearly protectionist when compared with those of other jurisdictions. The duration, frequency, and intensity of Korean competition oversight of U.S. firms have increased over time and may escalate further if South Korea enacts new platform legislation. The ongoing debate around this legislation underscores that now is a critical moment to reassess the KFTC’s approach—both to prevent further escalation and to ensure that existing concerns are addressed constructively.

U.S. firms consistently emphasize that they fully recognize and respect South Korea’s sovereign right to regulate trade, including for competition policy. However, they also stress that enforcement must be transparent, nondiscriminatory, and predictable, consistent with South Korea’s international commitments under KORUS and in line with broader global norms.

U.S. firms report that the impact of the KFTC’s actions are many, varied, and commercially significant. They face significant reputational damage from being dragged through multiple KFTC investigations and long and drawn-out legal challenges. U.S. firms report that the heavy-handed and aggressive regulatory scrutiny extends well beyond the KFTC to the Korea Communications Commission (KCC), South Korea’s National Tax Service, and the Korean National Assembly. New legislation that might be adopted would mean even higher legal and administration costs.

A comprehensive description of the core themes and issues highlighted in the interviews follows. This report then analyzes recent developments relating to competition policy under the new administration of President Lee Jae-myung and the potential implications for KFTC enforcement activities. The report concludes by examining how the issues identified in the interviews amount to a non-tariff barrier.

Key Issues from Interviews

This section identifies, synthesizes, and analyzes key issues identified by several U.S. firms that have been impacted by KFTC policies and enforcement actions. During anonymous interviews, U.S. firms described several major common issues that represent discriminatory and other highly problematic conduct in South Korea, especially when compared with other developed countries. U.S. firms asked to speak anonymously for fear of KFTC retaliation, noting that attempts to push back against the commission’s overreach often precipitate more aggressive actions, such as additional or extended dawn raids.

Lack of procedural fairness and due process in KFTC investigations. U.S. firms’ principal complaint about KFTC enforcement is the lack of basic procedural fairness and due process. There are several elements of KFTC investigations that undermine due-process protections. When considered together, their effects are compounded and lead to a situation where firms are unable to defend themselves as they would normally in other countries.

The KFTC strictly limits the information that firms receive during investigations. Unlike in the EU, the United States, and other countries, the KFTC does not as a matter of course provide the firm under investigation with access to its case file. This impedes the firm’s ability to understand the full scope and specific details of the alleged misconduct and thus defend itself. Firms complain about the overly broad and onerous requests for data and information, yet the only information they are able to access is that which the KFTC chooses to present in the examiner’s report (which is a summary of findings). As such, firms often are unable to highlight exculpatory evidence that the KFTC has not included. In contrast, in the EU and elsewhere, there is a formal “access to file” process where a firm under investigation can review all the information that the regulatory authority has collected throughout the investigation. As the European Commission’s Directorate-General for Competition notes, “access to the Commission’s file is one of the procedural guarantees intended to apply the principle of equality of arms and to protect rights of defense.”[3] While the 2020 amendments to the Monopoly Regulation and Fair Trade Act (MRFTA) were intended to address this complaint and establish a similar procedure to that in the EU,[4] by 2021 this had reportedly once again been restricted to information in the examiner’s report.[5]

Companies continue to report that, in practice, access to relevant information is not provided by the KFTC. As such, the issue is fundamentally not about the nature of South Korean law or how South Korea exercises its right to regulate, but rather with the KFTC’s compliance with the legal requirements under which it operates. Furthermore, by only being able to review a limited subset of information at a relatively late stage of the investigation, firms lack the opportunity to challenge or clarify information or allegations that the KFTC receives from other parties. Given that firms have noted that there is often significant political pressure on the KFTC commissioners not to reduce or undermine the remedies suggested in the examiner’s report, this functionally means that companies cannot proffer a defense or rebut the evidence against them prior to the penalty being determined.

This issue persists despite the fact that there are specific provisions of KORUS and discussions that relate to this issue. Article 16.1.3 states that a party in an administrative hearing related to competition must “have a reasonable opportunity to…review and rebut the evidence and any other collected information on which the determination may be based.” In 2019 the Office of the U.S. Trade Representative requested the first-ever consultations with South Korea under the chapter on competition-related matters (chapter 16) to address this specific issue, which clearly remains unresolved.[6] In response, in 2020 South Korea enacted amendments to the MRFTA, which extended the respondents’ right to inspect and reproduce documents relating to a decision by the KFTC. The amendments also created a requirement that the KFTC comply with document requests by parties, unless the materials requested contain trade secrets, relate to leniency applications, or are otherwise prohibited from production by another statute. However, U.S. firms do not feel that this requirement has been effective.

U.S. firms also consistently commented that they have limited or even no legal recourse to challenge the evidence against them and the rationale or scope of KFTC investigations in court until after the final decision is released. This contrasts with the United States, where U.S. firms could appeal to a judge to narrow the scope of the investigation or information disclosure if it is not relevant to the alleged misconduct. While firms have often succeeded in highlighting procedural violations and overturning KFTC decisions in court, the investigations and the costs these impose on firms have already been borne—and indeed are amplified by the need to prepare throughout the process for an eventual court challenge. Beyond the monetary costs, firms also suffer reputational damage from being accused of violating South Korean law—which is enhanced by the KFTC’s trumpeting of its enforcement actions and penalties and cannot be reversed even if the penalty is. Moreover, the fact that firms are often successful on appeal suggests deep procedural or substantive flaws across the KFTC’s investigative process, again reflecting that its concern is not about South Korean law but rather overaggressive enforcement.

Other features of KFTC investigations compound the impact of these issues on due-process protections. Firms report that the KFTC rarely shares details about the underlying complaint or theory of harm and that complainants remain anonymous, even when the allegations are vague or unsupported. Taken together, these factors make the KFTC investigatory process highly opaque, with regulatory authorities being reluctant to clarify the rationale behind their actions. The lack of transparency and procedural safeguards undermines the ability of firms to defend themselves as they would in other advanced economies throughout the G-7 and Organisation for Economic Co-operation and Development (OECD). These procedural deficiencies in the KFTC’s processes create a climate of uncertainty and risk, making it costlier for firms to operate in South Korea and raising the prospects of political targeting of disfavored firms.

The low and arbitrary threshold for investigations leads to frequent investigations that are nearly continuous. The KFTC has an exceptionally low bar for launching investigations. This includes acting on single, anonymous complaints without clear, substantiated accusations of wrongdoing. Both U.S. and Korean firms report being under nearly constant KFTC scrutiny, but U.S. firms note that investigations targeting them are especially frequent and arbitrary. According to multiple firms, these investigations often are initiated on a regular cadence, with executives becoming nervous when the KFTC has not launched a new investigation for several months—since this necessarily implies that one is imminent. The predictable tempo, with some firms describing investigations as being launched roughly every two to four months on average, suggests that the KFTC is under significant pressure to launch investigations into U.S. firms. Indicative of this low and arbitrary threshold for action, the KFTC often launches investigations of U.S. tech firms in the lead-up to the Korean National Assembly audit—a high-profile investigation of both regulators and firms in September and October. Following the audit, at which KFTC leaders are typically grilled about what they are doing to combat U.S. “big tech,” the commission often conducts a series of intensive on-site investigations and interviews.

As a result of this low threshold, firms have noted investigations launched into minor technical or business decisions that are clearly not anti-competitive, such as ceasing orders or relationships that are unprofitable. Firms report that early-stage KFTC interviews often primarily consist of basic questions about the functioning of certain products or services or the basic structure of a market in South Korea—questions that other regulators would answer themselves well before launching a formal investigation. Firms have also highlighted that the KFTC appears responsive to complaints from Korean firms, particularly in cases where the U.S. firm is a new entrant to a market dominated by a Korean firm. This situation is ironic given that competition law is designed specifically to protect such entrants.

KFTC investigations can span years and often overlap or recur, draining resources and disrupting normal business operations—particularly when multiple separate investigations target a single firm simultaneously. The agency’s justification is that this is due to the broad scope of laws it enforces; the need to protect complainants; staffing constraints, including a lack of legal, economic, and technology expertise; and the involvement of new technologies, which makes it hard to determine whether a law has been broken. The KFTC’s lack of technical competence is reflected in the fact that it often requires firms to process or analyze data in line with its requests—rather than conducting its own analysis—or even to translate documents made public as part of other regulators’ investigations. The latter is a time-consuming process that is generally handled by the regulators themselves. In practice, the combination of a low bar to launch investigations and the long duration of investigatory processes results in a continuous cycle of costly and distracting inquiries, requiring the retention of significant additional in-house legal and compliance staff as well as Korean outside counsel and making it more difficult for key leadership and business staff to pursue beneficial innovations.

Antagonistic enforcement tactics: Dawn raids, office occupation, and staff intimidation. KFTC enforcement is characterized by unnecessarily aggressive tactics, including the pro forma use of unannounced dawn raids at the start of an investigation. While U.S. firms describe some interactions with KFTC investigators as respectful, the prevailing experience is one of hostility and pressure to comply. The KFTC conducts additional dawn raids or antagonistic interviews against firms that push back, which firms note as a deterrent to exercising their legitimate rights.

The KFTC’s authority to conduct dawn raids and other investigations is established by Article 81 of the MRFTA and is in itself not a problematic legal authority. While competition authorities in other countries also conduct unannounced on-site inspections, and these are certainly justified in particular circumstances, firms state that the KFTC is unique in making them a regular, central feature of investigations—suggesting that their role is related not so much to legitimate objectives like the preservation of evidence but more to efforts to intimidate staff, disrupt business operations, or compel the production of information from the U.S. parent company regardless of the justifiability of the request.[7] The KFTC’s use of dawn raids contrasts with common best practices in the United States and elsewhere, where an investigation typically starts with a request for information or interviews.

This is not a new issue. As a result of pushback from the United States, the 2020 amendments to the MRFTA aimed to improve respondents’ rights when subjected to dawn raids. Specific provisions include an obligation that the KFTC provide targets of dawn raids with documents explaining the scope, purpose, duration, and methods of the on-site searches. They also include a limitation on dawn raids and interviews after an examiner’s report is issued, except upon the filing of a formal application to reinvestigate by the KFTC case team and approval by the commissioners of the KFTC.[8] However, firms still report that dawn raids are a regular feature of aggressive KFTC actions, can be extended or reinitiated in response to them pushing back against KFTC demands (see below), and often do not include a clear indication of the purpose of the raid or the scope of the investigation—suggesting that, much like with the amendments related to due process, the KFTC has not meaningfully implemented procedural reforms as required by law.

Following a dawn raid, KFTC staff often continue to occupy office space, sometimes for weeks, which makes it difficult for firms to carry on normal business operations. The KFTC often uses the threat of more dawn raids during interviews and investigations to encourage firms not to push back against broad requests for information (RFIs) or other enforcement activities (see below). In many cases, KFTC officials do indeed return for additional on-site investigations and interviews.

During dawn raids and subsequent investigations, staff are subjected to intense, prolonged interviews, often at both company offices and KFTC premises. They are frequently required to sign KFTC-prepared statements before being allowed to leave. Staff recount cases where investigators scream at their legal counsel and demand access to employee devices, even when this is physically impossible because passwords from staff who are not present are unavailable. The psychological toll can be significant. The situation is made more challenging because the KFTC often threatens individual employees with criminal obstruction of justice charges if they do not comply with KFTC requests, even when the requests are overly broad or not relevant to the investigation, forcing them to sign statements confirming that they are personally refusing a KFTC request and that they are aware that this may amount to obstruction. The ability of U.S. firms to defend themselves is all the more challenging because the rules of what constitutes obstruction of an investigation in South Korea are unclear, giving the KFTC broad leverage to use the threat of an obstruction charge to coerce or intimidate employees into compliance.[9]

Overly broad information disclosure requirements and risks to proprietary data. The KFTC has broad (and largely unconstrained) authority to request and seize huge amounts of information during raids and investigations, in contrast to other jurisdictions. Firms do not have the same legal avenues available in the United States and elsewhere to take regulatory agencies to court to challenge their requests for information and thus compel them to narrow their requests to what is relevant to the investigation. In South Korea, firms face repeated, broad, and onerous requests for data and information from the KFTC, including demands for highly sensitive proprietary data such as source code. Unlike the U.S. Federal Trade Commission, which allows for negotiation and legal counsel participation, the KFTC’s approach is described as pushing for a “floodgate” of information. Firms report that the information-gathering process is intense and not in line with best practices for discovery in international contexts. Moreover, it is very difficult to limit the scope of information requests via engagement with KFTC authorities, which is the only realistic option given the lack of recourse to the courts. Firms are concerned that these unconstrained information requests not only impose a heavy administrative burden but also expose them to risks of competitive harm, reputational damage, and the loss of intellectual property.

KFTC information requests are often numerous and vaguely defined. Some firms noted that they receive more requests for information from the KFTC than from any other competition authority. At the level of the individual request, the KFTC’s requests are often expansive in scope, such as for all the emails and documents from an employee over the last several years—without any limitations relating to the scope of the investigation. The volume of required disclosures is therefore immense and far beyond the standard for other regulators, with firms submitting thousands of files and hundreds of gigabytes of data. During a dawn raid, the KFTC’s official notice of investigation is often very vague, making it difficult for firms to understand what requested information might even be out of scope. The impact of complying with these frequent and broad requests for information is that when multiple agencies are involved, the requests often overlap, compounding the impact. This process can be repeated several times over the course of a few weeks as agencies issue new requests for information. The impact can extend beyond South Korea to emails, documents, and guidance from outside the country (i.e., from a firm’s headquarters staff), which poses additional concerns relating to internal review and compliance.

The KFTC’s broad powers to request whatever information it wants is made more problematic for U.S. firms trying to defend themselves because attorney-client privilege is not recognized in South Korean law.[10] This differs from major common law jurisdictions like the United Kingdom, the United States, Australia, and other countries, where there are blanket protections for communications between an attorney and a client. While civil law jurisdictions have their own legal procedures for protecting the confidentiality of attorneys’ advice, firms suggest that these are insufficient in practice when it comes to KFTC investigations, particularly in the context of wide-ranging RFIs—and especially when the RFIs target information from staff outside South Korea. The KFTC can, without recourse or any meaningful protection, see the legal advice that a firm’s in-house or external legal counsel has prepared as part of the firm’s efforts to defend itself against the KFTC. This may include analysis of the strengths and weaknesses of their legal defense strategy. There have been cases where the KFTC uses as evidence documents that reflect legal advice from a firm’s attorney.[11] A secondary impact of the lack of attorney-client privilege is a chilling effect under which employees are discouraged from seeking legal counsel for fear that consultations could be used as evidence against them. The impact on a firm’s employee conduct is further compounded by the KFTC’s unique predilection toward leveraging criminal sanctions as a supplement to its civil proceedings. Ultimately, this makes it harder for firms to comply with South Korean law.

The KFTC’s expansive requests are also often made with unreasonably short deadlines. Requests can involve hundreds of documents and gigabytes of files physically located both in South Korea and elsewhere that the U.S. firm’s in-house and external legal counsel—including U.S.-based counsel for documents relating to the U.S. headquarters—need to identify, gather, assess for relevance, and transfer. Moreover, the KFTC is unique in, on occasion, asking firms to process or analyze data for them rather than simply provide the commission with access to raw data (as is the norm in other jurisdictions). When firms push back against the production of a particular document or set of documents (e.g., because they see it as irrelevant to the investigation) or when they ask for an extension to produce the requested information, the KFTC often responds—as discussed above—by claiming that the individual employee is obstructing the investigation.

Broad, exploratory investigations targeting unspecified or nebulous harms. Firms—both U.S. and others—report that the KFTC is not transparent and upfront about the scope or focus of its investigations and that they often lack, at the outset, a specific theory of harm or allegation of anti-competitive misconduct.[12] When the KFTC turns up at a dawn raid, the official notice that the firm is under investigation often only includes broad and vague statements and ambiguous terms. Furthermore, firms lack legal avenues to understand, respond, and challenge the basis for and allegations within a KFTC investigation. These factors undermine firms’ due-process rights and allow the KFTC to move the goal posts throughout an investigation, shifting its scope or focus on a whim and making it significantly more difficult for firms to prepare a defense.

The lack of transparency about the purpose and scope of investigations makes it very difficult for firms to defend themselves and to ensure that the investigation and requests for information and interviews relate to specific alleged misconduct. Firms often must piece together information from interviews and informal discussions to surmise, frequently well after the start of an investigation, the central focus and overall scope of an investigation. In addition, firms bear the cost of managing ambiguous investigations that stem from the KFTC’s unwillingness to use other forums and tools to improve its understanding of technology and market dynamics before launching an investigation. Compounding the difficulty, firms note that the KFTC makes it unreasonably difficult to arrange a formal meeting for an open and meaningful discussion about the scope of an investigation and to provide an opportunity for firms to respond to the allegations and related evidence.

Firms suggest that the lack of transparency is not merely a procedural deficiency but rather a purposely ambiguous attempt to put together large-scale “fishing expeditions” where, at the end, the KFTC too often determines that everyone is guilty of something. The intentional ambiguity of many KFTC investigations is reflected in a clear lack of understanding of basic details about certain technology or market dynamics, and thus an inability to articulate in what ways a firm’s conduct might be anti-competitive. According to some firms, the KFTC has initiated investigations only to find out that the product or service at the center of the investigation is not even offered in South Korea. It has nevertheless continued to investigate separate products or services rather than simply dropping the investigation. In some cases, U.S. firms report that this leads the KFTC to search for and issue substantial penalties for minor infractions, presumably to justify the opening of an investigation even when anticompetitive behavior is not found.

Criminal investigations as a threat after the closure of a KFTC case. A unique and deeply troubling aspect of the KFTC’s behavior is the increasing willingness of South Korean authorities to regularly refer targets for criminal prosecution (in addition to administrative sanctions). This feature of the Korean competition regime is seen as an outlier globally and creates a chilling effect on business operations and decision-making. Another distinct feature is that administrative enforcement under South Korea’s MRFTA targets only corporations, whereas criminal enforcement can also target individuals. Criminal sanctions can therefore be imposed on top of administrative enforcement, as an additional layer.[13] Firms see the KFTC’s use of the threat of criminal referral as a key tool in its efforts to intimidate firms and their employees to provide whatever information it wants and to not push back against overreach. The normalization of criminal referrals in competition enforcement stands in stark contrast with the practices of other major jurisdictions.

The MRFTA has long allowed the prosecution authority to enforce competition rules, including abuse without dominance, either upon the KFTC’s referral or independently of the KFTC’s enforcement actions.[14] After civil legal proceedings (involving fines or other legal remedies) are concluded, the prosecutorial authority can review the same case for criminal liability, exposing employees and executives to personal risk, including prison time, for business practices that are not criminalized in other jurisdictions. The KFTC has guidelines that set criteria for filing criminal complaints against companies (legal entities) or individuals.[15]

However, U.S. firms note that the KFTC uses criminal sanctions, and just as importantly the threat of them, much more regularly now than in the past and to cover a wider range of conduct than in other comparable jurisdictions. Before, there was generally a low risk of criminal sanctions for allegations that a firm abused its market dominance via vertical conduct (i.e., anticompetitive practices involving firms at different levels of a supply chain). According to a news article based on a National Assembly report, from July 2022 to June 2023 (the first year of former president Yoon Suk Yeol’s administration), the number of referral requests by the criminal prosecution authority increased fivefold compared with the previous year.[16] The impact of potential criminal sanctions extends beyond the KFTC. Even if the KFTC decides not to criminally refer a firm’s employees, other Korean regulatory agencies, such as the Chair of the Board of Audit and Inspection, the Ministry of SMEs and Startups, and the Administrator of the Public Procurement Service, can also initiate investigations.[17]

Criminal enforcement is an area where South Korea stands out and apart from global best practices in relation to competition enforcement. As one Korean academic describes this feature: “in modern, liberal, and democratic countries, criminal sanctions, including imprisonment, for competition law violations (aside from hardcore cartels) are certainly uncommon. Only a few countries permit the use of criminal sanctions, and even fewer jurisdictions actively enforce them. South (not North) Korea, notably, is one of these rare exceptions.”[18] 

Concerns about the KFTC targeting U.S. firms, but not similarly situated Chinese ones. More recently, there are growing concerns that the KFTC targets U.S. firms more aggressively than Chinese or domestic companies. Some U.S. firms, but not all, report signs of a pattern of selective enforcement, with KFTC investigations disproportionately targeting U.S. companies while overlooking Chinese competitors operating in South Korea, regardless of their relative market share. In practice, this means that U.S. firms that have entered the Korean market began to face KFTC scrutiny sooner than Chinese competitors that are now entering and gaining market share—without similar headwinds from the KFTC. Firms report anecdotal evidence that the KFTC gives Korean and Chinese competitors more leeway for policies and business arrangements for which U.S. firms are often investigated and fined. Some U.S. firms attribute this to strong political and commercial ties between Chinese firms and Korean conglomerates, as well as government influence in choosing “winners and losers” in the market. However, much of the evidence thus far is circumstantial, based on enforcement patterns and stakeholder perceptions rather than explicit regulatory bias. The KFTC’s potentially biased treatment of U.S. firms will likely remain a key point of interest, given the ever-increasing number of KFTC enforcement actions and the global expansion of Chinese firms, which are seeking to tilt the playing field in their favor and against U.S. competitors.

Recent Developments Under Lee Jae-myung

Despite having vowed in his unsuccessful 2021 presidential campaign to reduce the regulatory burden on foreign companies, following his victory in the 2025 election, President Lee Jae-myung has indicated his intent to pursue an increasingly aggressive approach to competition policy enforcement.[19] Given the KFTC’s attentiveness to political signals, this will almost certainly result in intensified investigations into U.S. firms. The KFTC’s new chair has pledged to ensure that enforcement activities are in line with South Korea’s international obligations, particularly toward the United States, but this is yet to be demonstrated.[20]

Beyond enforcement, the KFTC has seized on the momentum provided by the new Lee administration to pursue legislative initiatives that would expand its powers, undermine the protections promised (but not enacted) in the previous MRFTA amendments, and enact targeted, ex ante restrictions on U.S. firms that would legally enshrine the unfair treatment that these firms have reported already exists in practice. Despite previous efforts to introduce a bill modeled on the EU Digital Markets Act in the form of the Platform Competition Promotion Act stalling due to intense pushback from a wide range of stakeholders, rather than abandoning its efforts, the KFTC instead has attempted to push substantively similar measures in the form of further MRFTA amendments.[21] At the beginning of the Lee administration, Democratic Party lawmakers introduced the Online Platform Fairness Act and urged rapid passage of the bill before U.S. firms could raise concerns. This iteration of the KFTC’s efforts is, in many respects, even broader than previous legislative proposals—providing the KFTC with wider latitude in deciding which firms to target, expanding the scope of KFTC enforcement to smaller entrants, and placing a broad range of commercial practices under the microscope of KFTC scrutiny.[22]

The elevation of competition policy issues to a major U.S. priority in tariff negotiations and the ongoing work to conclude a bilateral agreement has, fortunately, led to a postponement of these legislative efforts.[23] The willingness by the U.S. administration to highlight its—and the U.S. private sector’s—concerns about the proposed bills represents a welcome new step in what is now a years-long saga of working to hold the KFTC to account. However, it is clear from the repeated re-emergence of similar legislative proposals in different costumes that the KFTC will continue to pursue its agenda even in the face of staunch domestic and international opposition. As such, it is important to highlight the trade-restricting nature of not only the desired legal outcome but also ongoing activities.

Why Korea’s Approach to Competition Policy Enforcement Is Protectionist and a Non-Tariff Barrier to Trade

South Korea is not unique in having an active competition policy authority. Each country has a right to regulate competition and other digital policy issues, but this needs to be balanced with rule-of-law safeguards and international trade obligations. This right should not be exercised without sufficient legal and procedural protections, limits, and safeguards. As outlined above, KFTC enforcement activities clearly impede U.S. firms’ ability to engage in free and fair business and trade in South Korea. Several factors, taken together, show why the KFTC’s conduct breaches the threshold in becoming a non-tariff barrier to trade, especially when compared with practices in other advanced economy jurisdictions.

At the heart of the issue is that the KFTC undermines firms’ fundamental legal rights, especially relating to due process and procedural fairness, which impacts their ability to compete fairly in South Korea. U.S. firms operating in the country lack many of the same legal and procedural safeguards that they possess in most other advanced economy jurisdictions, which imposes significant costs and risks to doing business. Compounding this, U.S. firms are singled out with numerous and consistent investigations and feel disproportionately targeted compared with Korean firms—further enhancing their costs and tilting the playing field against them. The KFTC has proved it is willing to target U.S. firms even when they are new and minor (from a market share perspective) players in a market in South Korea. U.S. firms recognize that Korean chaebols are also investigated, but most think this happens less frequently or consistently. If U.S. firms had access to strong legal protections and safeguards (as in other comparable jurisdictions) to defend themselves against the KFTC, frequent investigations would be less of an issue because spurious allegations could easily be thrown out. However, this is clearly not the case, despite prior efforts by the United States to push South Korea to live up to its KORUS commitments and make legislative and procedural changes to how it enforces competition law. This lack of safeguards ultimately enables and facilitates unfair treatment, making it de facto a non-tariff barrier.

The KFTC’s ambiguous, broad, and aggressive investigations compound the impact on U.S. firms’ ability to enter and compete in Korean markets on fair and level terms. U.S. firms face major direct and indirect costs in trying to manage KFTC investigations while maintaining normal business operations. The KFTC’s broad power, combined with the low bar to launch investigations, means that once an investigation begins, regardless of the alleged misconduct, firms will have to spend significant resources in providing information, engaging with the KFTC, and fighting the charges. Despite this, fines or penalties nevertheless feel inevitable to targeted firms—requiring them to then either accept and pay that additional direct cost or incur additional costs to fight the penalty in court. Korean authorities’ ability to launch criminal investigations against firms and individuals is another unique factor that compounds the impact of the KFTC’s targeting of U.S. firms—a threat that, even if not exercised, provides a powerful incentive for firms not to fight back against overreach.

Many Korean firms and other stakeholders consider the KFTC’s approach as normal and are inured to these behaviors despite their clear divergence from global best practices. Some even characterized it as the cost of doing business in South Korea, quipping that it is not “pay to play” but “pay the violation to play.” Firms report that Korean counsel have suggested that they should just accept the premise of the KFTC’s actions, go through the motions of an investigation, decline to resist, pay the fine or take the legal remedy, and move on, preparing for further investigations in the future. While the KFTC’s conduct may appear normal for South Korea, it is certainly not normal when compared with other jurisdictions, particularly OECD members. Ultimately, the fact that Korean firms and stakeholders consider the KFTC’s conduct as normal still does not detract from the fact that it has elements that are protectionist barriers to trade.

While many Korean chaebols are also KFTC targets, they benefit from political and industrial policy support that—as shown above—can play a role in the KFTC’s decision about whether to launch an investigation. Moreover, the fact that the chaebols are headquartered in South Korea means that they tend to push back less against KFTC actions, preferring to instead engage politically and thereby receive lighter treatment. Since U.S. firms cannot make a similar tradeoff, this prima facie represents a non-tariff barrier against them.

Korean chaebols also clearly benefit from the KFTC focusing more on U.S. firms. The “cost of doing business” calculation is very different when one is an incumbent company as opposed to a new and foreign entrant. The fact that several U.S. firms have significantly lower market share in South Korea than in other comparable markets—making the country a clear global outlier, even to other jurisdictions with strong, active, and well-developed competition policy regimes—points toward the protectionist impact of Korean regulations in favor of local firms. The prevalence of highly concentrated local industries and conglomerates in South Korea played a direct role in the development of an active competition regulatory authority. Ironically, given the impact on domestic competition, the KFTC now seems focused less on its original raison d’etre and more on serving as a bulwark against foreign market access and competition. Future research will seek to quantify the magnitude of the lost market share for U.S. firms resulting from this differential treatment, but early estimates suggest that it easily exceeds several billion dollars.

U.S. and Korean stakeholders see several societal, political, institutional, media, and industrial policy elements contributing to the targeting of U.S. tech firms in South Korea. Firms have noted that the KFTC often wishes to be seen as responsive to the regular Korean media pressure to be tough on U.S. “big tech.” Although such media pressure is not in itself unique or unfairly protectionist, the launching of politically motivated, costly investigations in response certainly is. Ironically, the South Korean government, media, and regulatory authorities are also sensitive to the perception of being left behind or treated differently in the global development of new technology goods and services by international firms. Korean authorities have contacted firms to inquire as to why South Korea is not among the first to receive access to new products or services. Unsurprisingly, because of the lack of safeguards, some U.S. firms see the country as a high-risk market from a regulatory compliance perspective. This reflects how South Korea’s regulatory approach acts as a clear protectionist barrier to trade in practice: firms are unable or unwilling to sell products or services in the Korean market because of the overreach of the KFTC.

There are also interrelated institutional and political dynamics at play. The KFTC, as clearly demonstrated by its repeated efforts to promote new legislation, wants to expand its regulatory authority over online platforms, in part by displacing other sector-specific regulatory agencies (which tend to push back against the KFTC’s efforts). This explains, in part, the push for ex ante regulation. There is rivalry among regulatory agencies and conflict as it relates to their ambitions to grow. The Korean National Assembly (through its annual audit) is seen as a driving force for regulators and like-minded lawmakers to set (or at least be seen as setting, given the prevailing media narrative) a tough regulatory agenda to target U.S. tech firms. If the National Assembly calls for action, the KFTC reacts to advance its institutional interests—regardless of the evidentiary basis. Lawmakers and the KFTC work together on legislative proposals, in part because they want to protect themselves from media and public criticism that they do not do enough to target U.S. tech firms. This dynamic leads to the situation described above wherein U.S. tech firms brace for investigations and dawn raids right before and after the annual National Assembly audit.

The KFTC shows a strong deference to industrial policy objectives, further suggesting its role as a protectionist agency. U.S. and Korean stakeholders commented that when South Korean policymakers and regulators often state that their goal is to protect and promote small or medium-sized firms and competition, what they really mean is local industry and firms. This extends to legislative proposals regarding platforms and artificial intelligence. South Korea’s problematic track record in enacting protectionist digital policies also provides critical context for assessing its competition policies. For example, South Korea is unique in the world in that it precludes U.S. firms from transferring mapping data out of the country.[24] Its protectionist approach to the public cloud is also representative. The Cloud Security Assurance Program is unique among OECD members in requiring cloud providers to physically separate services for public- and private-sector clients; to exclusively use equipment, resources, and personnel in South Korea; to only store data in South Korea; to use a Korea-specific encryption algorithm; and to exclusively rely on Korean National Intelligence Service certification for key infrastructure.[25]

The combination of targeted investigations, disproportionate costs faced by U.S. firms as a result of this regulatory environment, and alignment between the KFTC and other Korean industrial policies clearly indicates that KFTC actions function as a non-tariff barrier, protecting Korean firms—even those that themselves face a degree of KFTC scrutiny. As the Trump administration and U.S. Congress continue to focus on non-tariff barriers to trade, the concerns identified by firms interviewed for this report should remain a policy priority.[26]

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Nigel Cory is a Director at Crowell Global Advisors and a Nonresident Fellow at the National Bureau of Asian Research.

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Endnotes

[1] “USTR Requests First-Ever Consultations under the U.S.-Korea Free Trade Agreement (KORUS),” Office of the U.S. Trade Representative, Press Release, March 15, 2019, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2019/march/ustr-requests-first-ever.

[2] White House, “Reciprocal Trade and Tariffs,” Memorandum, February 13, 2025, https://www.whitehouse.gov/articles/2025/02/reciprocal-trade-and-tariffs.

[3] European Commission, “Access to File,” https://competition-policy.ec.europa.eu/index/access-file_en.

[4] Jeffrey J. Amato, “Korea Enhances Due Process Protections for Companies Subject to KFTC Investigations,” Winston & Strawn LLP, May 19, 2020,
https://www.winston.com/en/blogs-and-podcasts/competition-corner/korea-enhances-due-process-protections-for-companies-subject-to-kftc-investigations.

[5] Namwoo Kim et al., “South Korea: Recent Statutory Changes and Cases,” Global Competition Review, April 21, 2021, https://globalcompetitionreview.com/review/the-asia-pacific-antitrust-review/2021/article/south-korea-recent-statutory-changes-and-cases.

[6] “USTR Requests First-Ever Consultations under the U.S.-Korea Free Trade Agreement (KORUS).”

[7] Stéphane Dionnet, Axel Schulz, and Henrik Viaene, “Cooperate, Protect, and Challenge: Responding to Dawn Raids Conducted by EU Competition Authorities,” McDermott Will & Schulte, August 13, 2025, https://www.mwe.com/insights/cooperate-protect-and-challenge-responding-to-dawn-raids-conducted-by-eu-competition-authorities.

[8] Belinda S. Lee, Meaghan P. Thomas-Kennedy, and Elizabeth C. Gettinger, “Korea,” in “Cartels: Enforcement, Appeals, and Damages Actions,” 10th ed., 2022,
https://www.lw.com/en/practices/antitrust-and-competition/admin/upload/SiteAttachments/GLI-CAR22_Korea.pdf.

[9] “Developments Regarding the KFTC at the National Assembly Audit,” Kim & Chang, October 17, 2018, https://www.kimchang.com/en/insights/detail.kc?sch_section=4&idx=19172.

[10] “Recent Developments Regarding Attorney-Client Privilege in Korea,” Lee & Ko, July 5, 2024, https://www.leeko.com/leenko/news/newsLetterView.do?lang=EN&newsletterNo=1073.

[11] Lee et al., “Korea.”

[12] Ibid.

[13] Sangyun Lee, “Main Developments in Competition Law and Policy 2024—Korea,” January 31, 2025, available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5172277.

[14] See Articles 124, 125, 128, and 129 of the MRFTA. In addition, see Article 4(1)(1)(a) of the Prosecutors’ Office Act (partially amended by Act No. 18861 on May 9, 2022, and effective as of September 10, 2022) and Article 2(2)(5)(b) of the Attached Form 2 in the Presidential Enforcement Decree on Rules for the Scope of Crimes Subject to Prosecutorial Investigation (as partially amended on September 8, 2022, and enforced from September 10, 2022, per Presidential Decree No. 32902).

[15] Guidelines include the severity of the violation, the extent of involvement in decision-making, and the degree of awareness of the violation’s illegality.

[16] The news article is available at https://www.etoday.co.kr/news/view/2261209. See also Sangyun Lee, “Duplicate Powers in the Criminal Referral Process and the Overlapping Enforcement of the Competition and Criminal Authorities in Korea: An Analysis through the Lens of the Redundancy Theory,” October 30, 2024, available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5004296.

[17] Lee, “Duplicate Powers in the Criminal Referral Process.”

[18] Lee, “Main Developments in Competition Law and Policy 2024.”

[19] “DP’s Lee Tells Amcham He Will Reduce Red Tape,” Korea JoongAng Daily, December 2, 2021, https://koreajoongangdaily.joins.com/2021/12/02/business/industry/Lee-Jaemyung-Amcham-US/20211202183747887.html; and “Overview of the New Korean Administration’s Competition Policy Agenda,” Bae Kim & Lee, June 11, 2025, https://www.bkl.co.kr/law/insight/newsletter/detail?lang=en&whichOne=NEWSLETTER&newsletterNo=6080.

[20] Yeo Dong-joon, Naver, September 4, 2025, https://n.news.naver.com/mnews/article/003/0013460075.

[21] Kim Moon-sun, “KFTC’s Platform Act Concern: ‘Policies That Do Not Take into Account the Digital Environment Will Hinder Market Competition and the Growth of Domestic Industries,” Platum, February 1, 2024, https://platum.kr/archives/222061; and “Overview of the New Korean Administration’s Competition Policy Agenda.”

[22] Lilla Nóra Kiss and Hilal Aka, “Korea’s New Fairness Act Risks Chilling Innovation and Derailing Trade Talks,” Information Technology and Innovation Foundation, July 24, 2025, https://itif.org/publications/2025/07/24/koreas-new-fairness-act-risks-chilling-innovation-and-derailing-trade-talks.

[23] Song Sang-ho, “Trump Threatens to Impose ‘Substantial’ Tariffs on Countries with Digital Taxes, Rules,” Yonhap, August 26, 2025, https://en.yna.co.kr/view/AEN20250826006100315.

[24] “Suggested Steps South Korea Could Take to Address Digital-Related Restrictions,” Computer and Communications Industry Association, April 2025,
https://ccianet.org/wp-content/uploads/2025/04/CCIA-South-Koreas-Barriers-to-U.S.-Digital-Service-Suppliers-and-Suggested-Commitments.pdf.

[25] “CCIA Comments on Korea’s Revision of Notice on Security Certification of Cloud Computing Services,” Computer and Communications Industry Association, February 23, 2024, https://ccianet.org/library/ccia-comments-on-koreas-revision-of-notice-on-security-certification-of-cloud-computing-services.

[26] For policy options to address these concerns, see Nigel Cory and Robert Holleyman, “Safeguarding U.S. Companies from Unfair South Korean Competition Policies,” NBR, Policy Brief, June 12, 2025, https://www.nbr.org/publication/safeguarding-u-s-companies-from-unfair-south-korean-competition-policies.