Recent Developments

The Korea Fair Trade Commission (KFTC) has issued the advance notice of the proposed amendment to the Notification Guidelines for Business Combinations (Notification Guidelines) for public comment from September 9, 2026 to September 30, 2026. The amendment to the Notification Guidelines has been proposed to clarify that acquihires, which are transactions becoming more common in emerging high-tech sectors (e.g., AI), may be subject to mandatory merger review and reporting obligations. Acquihires refer to transactions that utilize hiring arrangements and related agreements to transfer personnel in lieu of executing a formal business transfer agreement. Acquihire transactions have received significant attention by regulators due to large global tech companies’ execution of this transaction structure to systematically recruit key personnel while bypassing merger review. Because acquihire transactions may constitute a business transfer under the Monopoly Regulation and Fair Trade Act (MRFTA)—one of five types of regulated business combinations—the KFTC is seeking to amend the Notification Guidelines so that acquihire transactions clearly fall under the scope of a business combination subject to notification as a type of business transfer. Under the MRFTA, the transfer or lease of an entire or material part of a business is subject to merger notification if the transaction parties meet the relevant size thresholds or the transaction value exceeds a certain amount with the target entity having substantial activities in Korea. The KFTC will collect public comments during the period of the advance notice and proceed with implementation of the proposed amendment following deliberation and plenary session resolution.    

I. Key Contents of the Proposed Amendment

    A. Clarification of “business” to capture organized personnel

        The current Notification Guidelines define “business” under Article 9(1)(iv) of the MRFTA (Restriction on Business Combinations) as a bundle of property rights organized for the company’s business purpose functioning as an integrated operational unit, including sales rights, distribution systems, intellectual property rights such as patents and trademarks, and other items of economic value such as government permits and licenses. The proposed amendment to the Notification Guidelines specifies that when personnel organized into a functioning unit, combined with their technology or knowledge, perform a core business function, such personnel fall under the definition of “business.”  

    B. New standards for “material part” of business and calculating transfer price in acquihires

        The current Notification Guidelines provide that a “material part” of a business exists when (i) the part to be transferred or leased is capable of being operated as an independent business unit, or the transfer or lease causes a material decrease in the transferor’s sales, and (ii) the transfer price is at least 10% of the transferor’s total assets as of the end of the immediately preceding fiscal year, or at least KRW 10 billion.         The proposed amendment to the Notification Guidelines expands requirement (i) to include cases when the acquiring company is able to conduct the same business activities as the transferor, to now address acquihire transactions where key personnel (rather than an independently operable business unit) transfer to the acquiring company.         In addition, the proposed amendment to the Notification Guidelines revises how the transfer price is calculated for acquihires. The transfer price will now include any economic consideration (such as money or property benefits) paid to the transferor as consideration for the transaction, regardless of how it has been characterized. Examples include consideration for the release of rights relating to transferred personnel and license fees for intellectual property necessary for business activities.  

    C. New standard for “implementation” in acquihires

        The current Notification Guidelines define the implementation of a business transfer agreement as the completion of final payment. When final payment has not yet been completed, the business transfer is deemed to have been implemented upon delivery of movable assets, registration of real property, or registration of trademarks. The proposed amendment to the Notification Guidelines provides that the cessation of the transferor’s business in the context of an acquihire will also constitute implementation of the business transfer.  

II. Implications of Proposed Amendment

    In light of the proposed amendment to the Notification Guidelines, companies planning to transfer employees through an acquihire transaction should carefully assess whether the transaction may now trigger a merger notification obligation and factor any resulting notification requirement and review timeline into the transaction schedule.     The KFTC has also stated that the proposed amendment to the Notification Guidelines was developed through the exchange of information with foreign competition authorities, including the EU, Germany and the United Kingdom, and expects further international cooperation and response to new types of business combinations by large global tech companies. Given this exchange, companies planning acquihires should take into account potential coordination between the KFTC and multiple competition authorities during the merger review process. If you have any questions or require legal assistance on the matters addressed in this newsletter, please contact Lee & Ko's Antitrust & Competition Practice Group. Authors and relevant professionals : - Hwan JEONG Partner ( hwan.jeong@leeko.com ) - Jeong-Ho SUN Partner ( jeongho.sun@leeko.com ) - Min-Ho LEE Partner ( minho.lee@leeko.com ) - Suruyn KIM Partner ( suruyn.kim@leeko.com ) - Jungwon KWON Partner ( jungwon.kwon@leeko.com ) - Jeong Yoon CHOI Partner ( jeongyoon.choi@leeko.com ) - In Seon LEE Partner ( inseon.lee@leeko.com ) - Frank S. SHYN Senior Foreign Attorney ( frank.shyn@leeko.com )  

In 2026, the Korea Fair Trade Commission (KFTC) has taken two significant steps to address the growing risk of AI-related false and exaggerated advertising. First, the KFTC amended its “Review Guidelines on Labelling and Advertising for Endorsements and Testimonials” (Review Guidelines) to capture AI-generated “virtual persons” within the existing endorsement framework so that there is clear disclosure whenever such virtual persons are used to promote a product. The amendments to the Review Guidelines took effect on June 1, 2026. Second, on June 23, 2026, the KFTC proposed amendments to its “Notice on the Operation of Substantiation of Labelling and Advertising” (Substantiation Notice) which would require businesses to substantiate advertising claims involving AI and new technology prior to publication and to produce supporting evidence on request or become subject to an order to suspend the advertisement. Following the conclusion of the public comment period on July 13, the proposed amendments to the Substantiation Notice are expected to be implemented. Together, these measures reflect the KFTC’s broader effort to combat “AI-washing” (the practice of overstating or fabricating AI involvement in products and services to influence consumer purchasing decisions) and suggest that legal risk associated with unsubstantiated or improperly disclosed AI-related advertising claims will continue to rise. The key details and implications of the Review Guidelines and Substantiation Notice are as follows: I. Review Guidelines for Endorsements and Testimonials     The key contents of the amendments to the Review Guidelines are as follows:     A. Express inclusion of “virtual persons”         The previous Review Guidelines defined the subjects of endorsements and testimonials as consumers, celebrities, experts, and organizations or institutions. The amendments add “virtual persons” created using AI or similar technology to this list. This addition now establishes a clear basis for AI-based advertising to be regulated within the existing framework.     B. Mandatory disclosure obligation for advertisements featuring virtual persons         When an AI-generated virtual person is used in an endorsement or testimonial, the advertiser is now required to disclose clearly that the person is a virtual character. The disclosure must be made in a manner that consumers can clearly and easily recognize.         ■ Text-based media (e.g., blogs, etc.): The title of the post or the beginning text of the body must include a statement such as “This post contains a virtual person generated by artificial intelligence (AI)” or “Includes virtual person.”         ■ Photo or video media: During the appearance of a virtual person, text such as “Virtual Person” must be displayed in close proximity to the virtual person.     C. Regulation of “experience-based claims” by virtual persons         The amended Review Guidelines also expressly provide that where a virtual person’s endorsement or testimonial is presented based on an actual experience, such as user review, any content that does not reflect a real experience may constitute an unlawful advertisement (if false, exaggerated, or deceptive) under the Fair Labeling and Advertising Act (FLAA).         ■ For example, a before and after testimonial featuring an AI-generated virtual consumer, with content that does not reflect reality used to exaggerate the efficacy or effects of a product, would be a representative example of unlawful advertising. II. Substantiation Notice     The labelling and advertising substantiation system under the FLAA requires businesses to bear the burden of proving factual claims made in labelling and advertising. The Substantiation Notice sets out the specific operating standards for this system, including the request, review and processing of substantiating materials.     The current Substantiation Notice has not been substantively updated since 2015 and does not expressly address claims relating to AI or other recently developed technologies, nor does it reflect the KFTC’s enforcement practices developed thereafter. Thus, the proposed amendments are intended to bring AI- and new-technology-related claims expressly within the scope of the Substantiation Notice and, in order to prevent the spread of consumer harm, allows the KFTC to issue a cease-and-desist order against an advertisement where a business fails to submit the required substantiating materials.     The key contents of the proposed amendments to the Substantiation Notice are as follows:     A. Clarification on object of request for substantiating materials         The current Substantiation Notice allows the KFTC to request substantiating materials relating to         (i) direct effects on the human body,         (ii) safety or the environment,         (iii) performance, efficacy or quality, and         (iv) other matters that materially affect consumers’ purchasing decisions or trade order.         As claims regarding AI functionality in products and services have become more common, the proposed amendments expressly clarify that advertising claims relating to AI functionality and other new technologies also fall within this scope, such as the following examples:         ■ Claims of having adopted new technology, such as describing a product as “safer through artificial intelligence (AI) technology”;         ■ Claims involving safety, environmental or new-technology-related marks or certifications; and         ■ Environmental claims relating to eco-friendliness, recyclability or reduced carbon emissions.     B. Specification of procedures for requesting and submitting substantiating materials         Under the current Substantiation Notice, substantiating materials must currently be submitted, in principle, within 15 days of the KFTC’s request, with a possible extension of up to 30 days (from the date the relevant cause ceases) where submission is impossible due to force majeure or other unavoidable causes. The proposed amendments to the Substantiation Notice set out the qualifying grounds for extension in greater detail, namely: (i) force majeure; (ii) a merger or acquisition, or the commencement of rehabilitation, bankruptcy or similar proceedings; (iii) seizure or temporary custody of the books and records or evidentiary documents of the business by an authorized agency; or (iv) a fire or other disaster causing serious disruption to the company’s operations. Also, in order to reinforce the principle that businesses should substantiate their claims before advertising, the amendments to the Substantiation Notice shorten the maximum extension period from 30 days to 15 days.         In addition, where a business continues to run an advertisement without submitting the requested substantiating materials within the applicable (including any extended) period, the proposed amendments to the Substantiation Notice would allow the KFTC to issue a cease-and-desist order against that advertisement until the proper materials are submitted.     C. Introduction of self-assessment checklist         The proposed amendments to the Substantiation Notice also introduce a checklist to help businesses assess, both before and after publishing an advertisement, whether they have complied with their substantiation obligations, including in relation to substantiation methodology, evidence-gathering and the submission of materials. III. Implications of Amendments     The amendment of the Review Guidelines and the proposed amendments to Substantiation Notice show that the KFTC is bolstering its enforcement of the FLAA. This includes the KFTC’s goal to strengthen economic sanctions for unlawful advertising. Amendments to the Enforcement Decree under the FLAA, which significantly raise administrative fines for repeat violators and reduce financial incentives for mitigating factors, took effect in July 2026.     Additionally, the KFTC established a dedicated “Labelling and Advertising Monitoring Team” on March 23, 2026. Together with amendment on the Review Guidelines and the proposed amendments to the Substantiation Notice, these measures suggest that the legal risk associated with unsubstantiated claims relating to AI, new technology or the environment will continue to rise.     With the KFTC’s increasing enforcement interest in AI-related advertising activities, companies should consider establishing proactive internal and external review processes for the creation and execution of advertising, supported by the KFTC’s new self-assessment checklist, to mitigate the associated risk.

On April 23, 2025, the Korea Fair Trade Commission (KFTC) announced and implemented the amendment to the "Guidelines on the Operation and Evaluation of Competition Compliance Programs (CP)" (Competition CP Guidelines). The Competition Compliance Program (Competition CP) is an internal compliance system, which may include education or supervision mechanisms, established and operated by companies to comply with Korean competition laws. The KFTC performs evaluations on companies adopting Competition CP for voluntary compliance with laws and regulations under the KFTC’s authority, assigns ratings from the evaluation results, and provides incentives such as mitigation of corrective measures, reduction on administrative fines, and exemption from ex-officio investigations based on the ratings. With the recent growing interest in Competition CP, followed by the significant increase in the number of companies applying for Competition CP evaluation, there emerged the need to revise the evaluation criteria in order to encourage the adoption of Competition CP and ensure substantive Competition CP rating evaluations. With the amended Competition CP Guidelines, the KFTC has adopted more rigorous evaluation criteria to provide rating-based incentives primarily to companies with substantive Competition CP systems, while also reducing disadvantages to companies with violation histories to incentivize them to adopt the Competition CP system. We summarize below the key details of the amendments to the Competition CP Guidelines for further reference. 1. Key Amendments to the Competition CP Guidelines     1) Introduction of Designation System for Excellent Companies         The amended Competition CP Guidelines have simplified the previous six-tier rating system (AAA, AA, A, B, C, D) to a three-tier rating system (AAA, AA, A), while maintaining the previous rating standards.                  Before the amendment, incentives such as mitigation of corrective measures, reduction of administrative fines, and exemption from ex officio investigations were provided to all AAA, AA, and A-rated companies. Under the amended Competition CP Guidelines, benefits for A-rated companies will be abolished, and incentives will only be provided to AAA and AA-rated companies. However, given there is a grace period for policy changes, the abolished incentives for A-rated companies will apply starting from the 2026 Competition CP rating evaluation.              2) Violation Histories to Result in Less Disadvantages         The pre-amended Competition CP Guidelines adopted an "automatic rating downgrade" system where Competition CP operating companies that received sanctions such as administrative fines or criminal referrals for violating competition laws would have their ratings downgraded by up to two levels. However, the amended Competition CP Guidelines have now abolished this approach and instead reduced the disadvantage to a deduction of five evaluation points. Additionally, the amended Competition CP Guidelines specify that companies applying for Competition CP rating evaluation for the first time will not be subject to deductions for past violations.         The amended Competition CP Guidelines, however, have introduced qualitative evaluation criteria to maintain rigorous Competition CP assessments. The Evaluation Review Committee of KOFAIR (Korea Fair Trade Mediation Agency) may downgrade a company’s final ratings or exclude a company from receiving excellent company designation if the company causes social controversy due to competition law violations or significantly undermines the credibility of the Competition CP system.         The amended Competition CP Guidelines have also abolished the "rating deferral system" that suspended the evaluation process when the KFTC launched an investigation into violations. Under the amended Competition CP Guidelines, Competition CP rating evaluations will proceed on schedule even when an investigation has been launched or an examination report was issued during the evaluation process. This amendment was implemented to address unfair situations where companies faced delays in evaluation when ultimately no charges resulted.     3) Other Changes (Extra Points, Changes in Evaluation Procedure, etc.)         The amended Competition CP Guidelines have introduced a maximum grant of 1.5 extra points for companies which received "excellent" or higher grades in the KFTC's evaluation of the performance of their obligations under subcontracting, distribution, agency, and franchise agreements in the previous year.         The criteria for granting extra points for the establishment and operation of a self-regulated dispute mediation organization have also been modified. Previously, 0.7 points were granted for the establishment of a mediation organization, and 0.3 points for receiving and handling dispute-related opinions collectively. However, under the amended Competition CP Guidelines, the points for establishment have been reduced to 0.4, while the categories for opinion reception (0.2 points) and handling performance (0.4 points) have been separated and the corresponding points have been increased.         The evaluation process has been restructured as well. The previous process of Stage 1 (document evaluation), Stage 2 (on-site evaluation), and Stage 3 (in-depth interviews) has been restructured to Stage 1 (document evaluation including grants on extra points), Stage 2 (face-to-face evaluation), and Stage 3 (on-site evaluation). Under the amended Competition CP Guidelines, on-site evaluations will be conducted only for those companies scoring 80 points or higher after the first two stages, or when the Evaluation Review Committee determines as necessary. This amendment seeks to reduce the burden on the evaluators while securing comprehensive reviews for companies likely to qualify for an AA-rating or higher. 2. Implications of the Competition CP Guidelines Amendment     The KFTC has emphasized the development of a meaningful voluntary compliance culture that goes beyond the formal operation of competition compliance systems. The amended Competition CP Guidelines reflect the KFTC’s fundamental policy direction and include various measures to strengthen the core purpose and effectiveness of the Competition CP system.     The amended Competition CP Guidelines aim to enhance the quality of Competition CP operations by limiting incentives to exemplary companies. To receive these benefits, companies must develop Competition CP systems that address the evaluation criteria while making continuous efforts to ensure that their voluntary compliance programs function effectively. Notably, since on-site evaluations—which verify the accuracy of documents and face-to-face evaluation results—are mandatory for ratings of AA or higher, company-wide attention and participation would be required.     Furthermore, the amended Competition CP Guidelines have made the adoption of Competition CP more accessible by reducing disadvantages for companies with violation histories. Under the previous system, companies with histories of competition law violations had virtually no likelihood of achieving high Competition CP ratings, causing such companies to abandon compliance programs entirely. The amended Competition CP Guidelines have significantly reduced the deductions applied for past violations and have completely exempted deductions on companies applying for a Competition CP rating evaluation for the first time. Therefore, companies with violation histories are provided with an equal opportunity to benefit from Competition CP operations by demonstrating their commitment to future competition law compliance.      Considering these changes, it is recommended to establish a substantive compliance framework focused on fostering a long-term competition law compliance culture, rather than pursuing short-term strategies solely for obtaining incentives. If there are any questions and/or any legal assistance is required on this matter, please contact Lee & Ko’s Antitrust and Competition Group.

On September 11, 2024, the Korea Fair Trade Commission (the KFTC) announced a new roadmap for the legislation of the online platform regulation. In general, the new roadmap proposed the legislative plan to amend the Monopoly Regulation and Fair Trade Act (the MRFTA) to introduce new thresholds for the presumption of online platform operators’ market dominance, and to specify prohibited conducts of online platform operators. Rather than directly bringing in a dramatic change in the online platform regulation landscape by adopting a sector-specific law, the KFTC chose to adjust current regulation first to handle various issues in the online platform sector. Ki-Jeong Han, the chairperson of the KFTC, implied that the new roadmap is the alternative to the past legislation plan for the EU Digital Markets Act (the DMA) style ex-ante regulation. As a clear sign that the KFTC is continuing to scrutinize on anticompetitive conducts in the online platform sector, the new roadmap invites keen attention from the online platform operators doing business in Korea. KFTC’s Proposals in New Roadmap In the new roadmap, the KFTC proposed the amendment of the MRFTA, the prime antitrust/competition law in Korea, to regulate anticompetitive conducts of market dominant online platform operators. Major amendments proposed by the KFTC are as follows: The KFTC also specified (i) online transaction intermediation platforms, (ii) online search engines, (iii) online video platforms, (iv) social network service platforms, (v) operating systems, (vi) online ads as major sectors that will be the primary targets of the regulation. While there still are bills pending in the National Assembly that stipulate the EU DMA style ex-ante online platform regulation, the KFTC, in responding to the imminent need for the online platform regulation and the backlash from the market, took a step back from the adoption of ex-ante regulation of online platforms, and the legislation of an independent and specialized antitrust/competition law for the online platform sector. Unsuccessful Efforts in Adoption of DMA Style Ex-ante Online Platform Regulation Since 2020, the KFTC has been on the drive to adopt sector-specific antitrust/competition law regulation for online platforms. Initially, the KFTC proposed to introduce the “Fair Intermediation Transactions on Online Platform Act” (the FOPA), which primarily targeted to regulate unfair trades related to online transaction intermediation services. The bill was proposed in the 21st National Assembly however, was abolished following the expiration of the 21st National Assembly’s term. In responding to the growing needs for the section-specific regulation in the online platform industry, the KFTC, besides the FOPA, adopted various sector-specific regulations and guidelines in divert areas of antitrust/competition law (the KFTC also adopted sector-specific regulations for consumer protection in online platform sector). Followings are major developments made by the KFTC in regards to the online platform or digital sector. Upon the EU’s implementation of the DMA, the KFTC initiated the discussion on the need for the DMA style ex-ante online platform regulation in Korea. The KFTC, highlighting the necessity of swift and effective response against online platform operators’ abuse of market dominance, proposed the enactment of “Platform Competition Promotion Act” (the PCPA) which includes the rules for the ex-ante designation of market dominant online platform operators or “gatekeepers”. While the KFTC was already able to regulate online platform operators’ abuse of market dominance with regulations in the MRFTA, the KFTC aimed to expedite and streamline the investigation process in online platform sector by avoiding tedious process of defining a relevant market through economic analysis. However, the KFTC’s attempt to adopt ex-ante regulation through the PCPA faced fierce resistance in the market. Korean online platform markets’ competition landscape is quite unique in the age of global “big tech” companies in that domestic platforms are flourishing in markets despite of the global big tech companies’ market penetration. The unique competition landscape resulted in the concern that the ex-ante designation of “gatekeepers” result in the regulation only on domestic platform operators and not the global big tech companies, which was the focus of the EU’s DMA and online platform regulations in other jurisdictions, resulting in uneven playing field in favor of global big tech companies. Furthermore, as Korea is one of the pioneering country in digital era nurturing a myriad number of start-up companies, there also were concerns that a precipitate adoption of sector-specific ex-ante regulation would hinder the innovation in the market. The new roadmap is the KFTC’s response in confronting the fierce resistance in the market and requests for active enforcement of antitrust/competition law in online platform sector. The KFTC renounced the adoption of ex-ante regulation and decided to amend the MRFTA to tackle online platform operators’ abuse of dominance while minimizing the negative effects of the sector-specific regulation. Limits of Proposed Legislation Plan in KFTC’s New Roadmap Save for introducing separate thresholds for the presumption of market dominance and increasing the maximum amount of administrative fine, the proposed legislation plan on online platform regulation in the KFTC’s new roadmap, in general, is a clarification of the rules in KFTC’s Guidelines for Review of Online Platform Operators’ Abuse of Market Dominance. Further considering that only a very limited number of online platform operators would be captured as market dominant players under the new thresholds of market dominance presumption, and that the KFTC was already able to investigate online platform-specific abuses of market dominance (e.g., self-preferencing) with existing laws and regulations, the proposed legislation plan in the KFTC’s new roadmap is less likely to result in substantial change in the online platform regulation landscape. In addition, the legislation plan did not provide predictability (especially to global online platform operators) on the scope of online platform operators which would likely to be captured under the regulation. The KFTC’s proposed thresholds for market dominance presumption of online platform operators stipulates that any online platform operator with annual platform-related (direct and indirect) turnover (including those of affiliates) less than KRW 4 trillion (approx. USD 3 billion, EUR 2.7 billion) shall be excluded from the presumption. However, the thresholds do not provide clear explanation on the scope of “platform-related turnover” and “indirect turnover.” If the turnover refers to domestic turnover, most of the global big tech companies engage in Korean business could be excluded from the market dominance presumption. To avoid such situation, the KFTC is likely to widen the scope of “platform-related turnover” and “indirect turnover,” and in this case it would be extremely difficult for global online platform operators to predict whether the regulation is applicable to their business without a clear definition. Furthermore, as the “less than KRW 4 trillion” threshold may allow most of online platform operator to avoid the presumption of market dominance (as for domestic platform operators, only 3-4 online platform conglomerate would be captured), the regulation under the new roadmap may also not be as effective as it intended to be. Implications Despite of the limits and problems, the KFTC’s new roadmap clearly demonstrates the KFTC’s will to strengthen the enforcement of antitrust/competition law in the online platform sector. Furthermore, considering that the KFTC has been conducting relentless investigations on global online platform operators, the KFTC is also likely to utilize the new regulations to expand the scope and targets of the abuse of market dominance investigation on global online platform operators doing business in Korea. In addition, in a long-term, the new roadmap may pave the road for the National Assembly to enact a sector-specific ex-ante regulation in the online platform sector. In this regard, the KFTC’s new roadmap invites the keen attention of online platform operators (especially global big tech companies) to keep in track of the future legislative developments in online platform regulations.