80% of small businesses complain about unfair competition

August 29, 2016

Nearly eight out of 10 small and midsize enterprises (SMEs) think Korea is not providing a level playground for large and small businesses to compete fairly, a survey showed on 29 August, 2016.

The Korea Federation of SMEs conducted the survey of 320 small business owners about the allegedly unfair business practices of their larger counterparts. 

Asked whether SMEs can compete and make fair transactions with large businesses, 76.9 percent of respondents said “no,” and 57.7 percent of these cited “lack of will” by large businesses as the biggest reason, the survey showed.

More than four out of 10 SMEs regarded government regulations to prevent large companies’ unfair business practices as ineffective.

Specifically, 53.1 percent regarded regulations limiting chaebols from giving too much work to their subsidiaries as ineffective, 45.3 percent cited the government’s punishment criteria as invalid, 44.4 percent believed the Fair Trade Commission (FTC)’s exclusive right to accuse is inefficient, and 55.6 percent said the punitive compensation system concerning unfair practices was ineffective.

Regarding the most urgent regulations needed to ensure fair competition, 38.3 percent pointed to the conglomerates’ placement of orders with subsidiaries while 68.2 percent called for strengthening the criteria to punish unfair practices by large companies by, for instance, drastically raising penalties.

In order to root out unfair trade practices, 55.2 percent of small business owners called for the FTC to be given authority to investigate, allowing the antitrust agency to seize and search violators. A total of 42.8 percent of respondents also wanted to expand the right to accuse so that the heads of the Board of Audit and Inspection, Public Procurement Service and the Korea Federation of SMEs could also exercise it.

“To prevent unfair trade practices, the government should improve punitive rules in more reasonable ways and, at the same time, strengthen the authority of the antitrust agency by giving it compulsory investigative rights,” said Kim Kyung-man, head of the federation’s economic policy headquarters.

(By Choi Sung-jin)