Economic reform measures pushed by the Lee Jae-myung administration are running into resistance on multiple fronts. Some large companies are openly challenging investigations by the Fair Trade Commission, which has led the government's crackdown on corporate practices, while the labor union at state-run Korea Land & Housing Corporation has warned of a general strike over a plan to spin off part of the agency. In rural areas, a comprehensive survey of farmland and the government's review of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership are drawing significant backlash. Experts say what matters in reform is not justification but acceptance.
Companies are increasingly turning to the courts in disputes with the FTC, according to business and government sources on the 20th. Rather than filing administrative suits after penalties such as fines are finalized, they are now seeking court rulings from the moment investigations begin and evidence is gathered.
On the 9th, a court granted a request by Hanwha to suspend the effect of an FTC order to submit documents. Hanwha argued that the process was flawed because the FTC reviewed text messages on employees' mobile phones without a warrant before ordering the submission of materials in an investigation into brand royalties paid among affiliates. The company also filed a suit seeking to cancel the order. The FTC said it conducted the investigation lawfully with the consent of those involved and that there was no coercion.
Coupang refused to cooperate with an on-site FTC inspection. It was the first time a company's refusal had derailed an on-site inspection since the large-scale retail business act took effect in 2011. The FTC visited the company last month to examine allegations that Coupang passed the cost of discount coupons on to suppliers, but withdrew without obtaining any materials.
Coupang filed a suit to cancel the decision to conduct the inspection, along with a request for a stay of execution, arguing that the FTC acted unlawfully by failing to give written notice seven days in advance. The FTC countered that investigations under the large-scale retail business act are exempt from advance notice requirements. "Since the current administration took office, the intensity and frequency of FTC investigations have increased sharply, and there is a growing sense of alarm that even core business operations and investment activity could be chilled," an industry official said.
Resistance to the government's reform plans is also intensifying in the public sector. The spinoff at LH, seen as the centerpiece of efforts to overhaul the functions of state-run institutions, is a prime example. The LH union said the spinoff is being pushed through without sufficient consultation with employees, and about 8,000 members have entered formal labor dispute procedures, with the union warning it will launch a general strike if the plan goes ahead. The result is a paradox in which a reorganization intended to expand housing supply is raising the prospect of a strike at the very agency responsible for delivering it.
Opposition in farming communities to the comprehensive farmland survey is also spreading. Under the revised farmland act, disposal orders for land left uncultivated without valid reason or illegally leased out have shifted from a matter of local government discretion to a legal obligation. If a disposal order is not carried out, an enforcement charge equal to 25% of the land value can be imposed each year. Farmers say the measure is a blanket approach that ignores conditions in rural areas, including an aging population, labor shortages, inherited farmland and customary leasing arrangements. Some local governments are also said to be struggling with the survey and with handling public complaints because detailed guidelines remain unclear.
"As the president's approval rating has begun to fall, conflicts that had been simmering below the surface are now erupting in earnest," said an industry official who previously worked at an economic ministry. "The government needs to build a more refined implementation plan."
