Government Takes Aim at Hoarding and Price Gouging: If Goods Are Not Sold, Disposal Orders and Enforcement Fines Will Be Imposed

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[Financial News] The Government of South Korea will begin enforcing a system that can forcibly release hoarded goods into the market. If stockpiled items are discovered, the government will order them to be sold or disposed of within a set period. If the order is not carried out, an enforcement fine will be imposed. Seized goods will also be allowed to enter the market before a trial ends, and a reporting reward system and penalty surcharge system will be introduced as well. 
On the 21st, the Ministry of Economy and Finance announced the plan, titled "Measures to Enhance the Effectiveness of Price Stabilization Measures," at a ministerial task force meeting on special management of consumer prices.
The move to revise the Price Stabilization Act comes amid renewed concerns over inflation. Kang Giryong, Assistant Minister of Finance and Economy, said, "Consumer prices rose 2.2% in March and 2.6% in April, and in May the increase could be even larger than in April due to the impact of oil product prices."
To quickly ease supply shortages, the Government of South Korea will introduce a "rapid distribution enforcement measure." Under the current Price Stabilization Act, even if a hoarding company is caught, authorities can only issue a corrective order and have no legal mechanism to force actual sales. In effect, the system has depended on the company's voluntary cooperation.
Accordingly, the Government of South Korea plans to revise the Price Stabilization Act to create new provisions for "disposal orders" and "enforcement fines." Going forward, if hoarded goods are found, the government will order them to be released into the market within a set deadline. If the order is not followed, an enforcement fine will be imposed.
Kang explained, "It means ordering the disposal of the hoarded quantity by a certain deadline," adding that it is "a mechanism to force actual distribution in the market." As for the size of the enforcement fine, the government plans to refer to cases under the Financial Investment Services and Capital Markets Act and the MRFTA, and to flesh out the details during future legislative discussions.
The handling of seized goods will also change. Until now, even if hoarded goods were confiscated, their release into the market was restricted until the trial ended. Many have pointed out that the long time required for a final ruling and auction procedures after seizure reduced the effectiveness of easing supply shortages. The Government of South Korea therefore plans to create a new "special sale provision" that would allow goods to be sold immediately at the seizure stage when urgent supply needs are recognized. The aim is to reduce inefficiency, in which seized goods remain stuck in warehouses for long periods during supply shortages.
Measures to speed up early enforcement will also be implemented. Through a revision of the enforcement decree, the Government of South Korea will delegate authority to crack down on hoarding at the import and customs clearance stages to the Commissioner of the Korea Customs Service. At the same time, it will establish a new penalty surcharge rule to recover economic gains obtained through hoarding and other acts, while also introducing a reporting reward system. Rewards will be paid according to the level of contribution for reporting violations such as price ceilings, emergency supply and demand adjustment measures, and hoarding bans.
hippo@fnnews.com Kim Chan-mi Reporter