Criteria and Limitations for the Use of Hearsay Evidence in Administrative Litigation Procedure

1. Background
   The Fair Trade Commission (FTC) is empowered to initiate administrative investigation for evidence discovery during the investigation of a case. However such administrative investigation power is not as strong and rigorous as the judicial power of compulsory disposition vested in prosecutors in terms of the threshold of initiation, level of authority, or procedure. Thus there has been varying degree of tolerance for the use of hearsay evidence in litigation procedure with respect to the practice of litigation and court proceedings, which reflects the difference in the substance of administrative investigation power and judicial power of compulsory disposition. However there is a need to clarify how should the criteria and limitations for the use of hearsay evidence be delineated.
2. Key Recommendations
   Given the unlawful nature of Fair Trade Law cases, the conclusion drawn from the above study is that hearsay evidence still possesses evidentiary power in administrative lawsuit involving Fair Trade Law. From the perspective of practical operation, there is factual need for the FTC, as the defendant in an administrative lawsuit, to use hearsay evidence to investigate and discover the facts of unlawfulness when the investigation tools and the compulsory disposition power it possesses are less than those of the criminal or prosecutorial authorities. Certain types of Fair Trade Law violation cases, such as abuse of monopolistic position, concerted action, counterfeiting of other's symbol, the act of restricting or impeding competition in violation of Article 19 of the Law, illegal act of multi-level sales, and slander of business reputation, also involve criminal liability. In those cases, when hearsay evidence is presented as facts to be proved (i.e. items to which the rule of strict proof applies), while such evidence is admissible, more rigorous requirements and more prudent approach should be taken in contrast to other administrative law violation cases involving simply administrative liability, so both objectives of a suit, that is, harmonization of public and private interests and discovery of truth, are given balanced consideration.
   This study surmises that the evidentiary power of hearsay evidence in principle should not be excluded in administrative lawsuit involving Fair Trade Law. However to use hearsay evidence as the basis for determination of facts, some limitations should be imposed as proposed below:
   (1) The hearsay evidence should be free of the risk of bias or error in relation to the case concerned.
   (2) The counterparty did not provide any specific reasons that point to bias or error in the hearsay evidence.
   (3) There must be other corroborative evidence to warrant the truthfulness of the hearsay evidence.
   The three points above are the concrete recommendations this study makes for the limitations that should be set out when using hearsay evidence in administrative lawsuit involving Fair Trade Law. However, the FTC as the competent authority of the competition law should exercise self-restraint during the investigation of a case to reduce its reliance on descriptive evidence. Even if the use of hearsay evidence is deemed necessary, the FTC should heed that there are facts to other corroborative evidence that will help solidify the credibility of the reasons given for the decision it has made. Such approach will also aid the rate of decision upheld when the case subsequently goes into the administrative litigation stage.