KFTC Initiates Consent Decision Process
for Hyosung and Hyosung Heavy Industries
Hyosung and Hyosung Heavy Industries, which were investigated by the Korea Fair Trade Commission (KFTC) on suspicion of abusing their position by demanding technical data from subcontractors, have chosen to avoid sanctions by submitting a voluntary corrective action plan.
On June 2, the KFTC announced that it had decided to initiate the consent decision process regarding alleged violations of the Subcontracting Act by Hyosung and Hyosung Heavy Industries.
The consent decision is a system in which a company suspected of violating the law proposes a reasonable corrective action, such as restoring the original state or compensating victims, and the KFTC, after collecting opinions from stakeholders, acknowledges the validity of the proposal and closes the case without determining whether a violation occurred. While it does not make a legal judgment on the violation, it is regarded as a means to provide practical relief to consumers and to swiftly restore competitive order.
The KFTC has been investigating Hyosung and Hyosung Heavy Industries for alleged violations of the law that occurred when they demanded and used technical data from subcontractors while outsourcing the manufacturing of parts for heavy electrical equipment.
After receiving the KFTC's review report in November last year, Hyosung and Hyosung Heavy Industries submitted a voluntary corrective action plan in March, stating their intention to improve the order of subcontracting transactions and to promote mutual growth and cooperation with subcontractors.
The main points of the voluntary corrective action plan include measures to improve the order of subcontracting transactions, such as establishing and operating a system for managing requests for technical data and confidentiality agreements, introducing new business guidelines, and conducting regular training. The plan also includes support measures for subcontractors, such as providing equipment to improve the working environment.
They also announced their intention to implement measures totaling 3 billion KRW, including additional support for research and development (R&D), industry-academia cooperation, and obtaining domestic and international certifications, in order to promote mutual growth with key component partners.
This is the first case in which the consent decision system, introduced into the Subcontracting Act in July 2022, has been applied to Article 12-3, which prohibits the demand for technical data.
A KFTC official stated, "If leading companies in the sector, such as Hyosung, improve their practices regarding the demand and use of technical data, it is expected that a 'culture of protecting subcontractors' technical data' will become more firmly established in other manufacturing sectors as well."
The KFTC announced that it plans to further specify the voluntary corrective action plan, prepare a provisional consent decision, and quickly submit the final plan to the full commission after consultations with stakeholders and relevant agencies.
The KFTC explained, "We made this decision after comprehensively considering the nature of the case, the effect on establishing order in subcontracting transactions and protecting subcontractors, the balance between the cost of implementing the corrective measures and the expected level of sanctions, the fact that Hyosung and others did not intend to disrupt the order of subcontracting transactions, and that no actual financial damage to subcontractors was confirmed."
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