Companies based outside a local jurisdiction will find it easier to enter the residential waste collection and transport market, as South Korea moves to lower regional barriers to competition.

The volume of distilled spirits that manufacturers can sell directly to liquor makers will also increase fivefold, widening purchasing options for soju producers and other beverage manufacturers.

The Korea Fair Trade Commission announced the measures Tuesday as part of its "First-Half 2026 Plan to Reform Competition-Restricting Regulations," identifying six areas for improvement.

The Korea Fair Trade Commission at Government Complex Sejong in Sejong [Newsis]
The Korea Fair Trade Commission at Government Complex Sejong in Sejong [Newsis]

The six reforms were identified through market analysis and consultations with industry associations and experts. The Fair Trade Commission said it worked with related ministries to pinpoint regulations that block new market entrants or constrain business activity.

The first measure lowers regional entry barriers in the residential waste collection and transport market. Under the revised system, a company licensed to operate in one city, county or district that applies to expand into another area must, in principle, be granted permission by the relevant local government.

Currently, waste collection and transport operators must obtain a separate license for each city, county or district where they wish to operate. Local governments then periodically hold competitive tenders among licensed operators to select contractors.

Some local governments have in effect refused to license operators based elsewhere, making it difficult for outside companies to enter local markets. The Fair Trade Commission said this entrenched incumbent-dominated market structures and created conditions conducive to bid rigging.

The commission will also reform the distribution structure for distilled spirits used in alcohol production. The share of output that spirit manufacturers may sell directly to liquor makers will rise from 2 percent to 10 percent of total sales volume.

Under the current system, the cap on direct transactions means 98 percent of distilled spirit sales flow through wholesalers. The commission said this has made it difficult to foster price and quality competition among spirit producers and has limited liquor makers' freedom to choose their suppliers.

The Fair Trade Commission said expanding the direct-sales ceiling fivefold would broaden the scope for liquor makers to deal directly with spirit producers, spurring greater competition among manufacturers.

In the audit market, mid-sized and smaller accounting firms will gain greater access to auditing larger listed companies. When financial regulators designate auditors for listed companies and others, qualifying mid-sized and smaller firms will be allowed under a new special provision to audit companies larger than those currently permitted.

The current system classifies accounting firms into four tiers — Groups A, B, C and D — based on staffing levels and other criteria, with each tier assigned a different range of companies it may audit. However, the asset threshold below which only Group A firms could serve as auditors was lowered in September 2022 from 5 trillion won ($3.62 billion) to 2 trillion won, shrinking the pool of companies available to Group B and C firms.

Going forward, Group B and C firms will be granted eligibility to audit companies currently reserved for the tier immediately above them, broadening competition in the auditor-designation market.

Staffing requirements for branch offices of accounting firms will also be relaxed. Firms currently must have at least three certified public accountants working full time at any branch office outside their main office; that minimum will be reduced to one.


y2k@heraldcorp.com