French GTT fined 12.5 billion KRW for bundling LNG cargo tank services with Korean companies including Daejoyang

Fair Trade Commission "Tying Regulation for the First Time in 14 Years Since Microsoft in 2006"

[Asia Economy Reporter Moon Chaeseok] The Fair Trade Commission announced on the 25th that it has decided to impose a fine of 12.5 billion KRW and corrective orders on GTT for tying engineering services to LNG cargo tank patent licenses sold to our shipbuilding companies. GTT is a French company that holds the original technology for LNG engineering.

According to the Fair Trade Commission, GTT signed license agreements with eight Korean businesses, including Daewoo Shipbuilding & Marine Engineering, Hyundai Heavy Industries, and Samsung Heavy Industries. It provided LNG cargo tank technology licenses to domestic shipbuilders constructing LNG vessels.

The issue lies in the fact that GTT forced the purchase of engineering services during this process. Since 2015, domestic shipbuilders have repeatedly requested to purchase only the technology licenses from GTT, but GTT has rejected all such requests. It still bundles its engineering services.

The Fair Trade Commission judged that GTT’s actions constitute unfair practices that block market entry by other companies and restrict buyers’ choices. This violates Article 3 of the Monopoly Regulation and Fair Trade Act.

The Commission explained, "Under the current contract structure, shipbuilders lose the opportunity to compare and decide among other options and are forced to use only GTT’s services, ultimately resulting in restricted competition in the related engineering services market."

Accordingly, the Fair Trade Commission announced that it has decided to impose a provisional fine of 12.528 billion KRW and corrective orders (such as contract modification orders upon shipbuilders’ requests) on GTT.

The Commission also judged GTT’s act of blocking opportunities to challenge the validity of its patents as unfair.

GTT set transaction conditions allowing it to terminate contracts whenever shipbuilders dispute the validity of its patents. This prevents shipbuilders from challenging GTT’s patents even if they are invalid, raising concerns about paying royalties for invalid patents.

The Fair Trade Commission stated, "Considering the reality that LNG shipbuilding businesses cannot operate without GTT’s technology licenses, it is impossible for shipbuilders to risk market exit due to contract termination just to dispute patent validity."

Therefore, the Commission judged that GTT’s patent-related actions violate Article 23 of the law and Article 36 of the Enforcement Decree of the same law. It decided to impose corrective orders on GTT (orders to modify or delete contract clauses).

Lee Ji-hoon, head of the Manufacturing Industry Monitoring Division at the Fair Trade Commission, said, "This case is significant as it reconfirms that tying practices by market-dominant businesses are illegal, following the 2006 case involving Microsoft’s bundling of Windows Server operating system and Windows Media Services."

Lee added, "Through this measure, it is expected that new entrants will be able to enter the related LNG cargo tank engineering services market, which GTT has monopolized, promoting competition based on price and quality."

The Fair Trade Commission stated that it plans to strictly monitor future acts by monopolistic businesses abusing patent rights to restrict competition.