The Korea Fair Trade Commission (KFTC) is expanding its investigation into the "Big Four" defense companies, targeting unfair practices against subcontractors in the defense industry.
According to industry sources on December 9, the KFTC dispatched investigators to the headquarters of LIG Nex1 in Yongin, Gyeonggi Province, to conduct an on-site inspection. The KFTC is reportedly examining whether LIG Nex1 violated the Fair Transactions in Subcontracting Act (Subcontracting Act) and engaged in unfair practices during its transactions with partner companies.
As a result, all of the "Big Four" defense companies are now subject to KFTC investigations for alleged violations of the Subcontracting Act. On November 11, the KFTC sent investigators to the headquarters of Hanwha Aerospace and Korea Aerospace Industries (KAI) to conduct on-site inspections, and on December 2, it carried out a similar inspection at Hyundai Rotem.
A KFTC official stated, "We cannot confirm specific details about the ongoing investigation," but added, "We plan to complete the on-site inspections as quickly as possible and will review the collected materials to determine whether there have been any legal violations."
Delayed payments to subcontractors, misappropriation of partner companies' technical information, and downward pressure on supply prices are cited as widespread abuses in the defense industry. The KFTC's investigation has intensified since President Lee Jaemyung expressed his determination to eradicate unfair practices entrenched in the defense sector during the Defense Industry Development Forum held on October 20.
At the time, President Lee warned, "Since taxpayer money is invested in the defense sector, companies must focus on sustaining the industrial ecosystem," and added, "We will increase KFTC personnel, and if large corporations abuse their position through practices such as cost-cutting, they will face severe penalties."
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