Hyundai Heavy Industries Transfers 'SoBuJang' Small Giant Technology to Other Companies... Fair Trade Commission Imposes "Record High" Fine of 970 Million KRW

[Sejong=Asia Economy Reporter Joo Sang-don] It has been revealed that Hyundai Heavy Industries coercively obtained technical data from a subcontractor with whom it had maintained a close cooperative relationship for over 20 years during the localization process of core components and provided it to another subcontractor. Through this, Hyundai Heavy Industries dual-sourced piston production, lowered the delivery price by more than 10%, and ultimately unilaterally terminated the transaction.

The Fair Trade Commission decided to impose a corrective order and a fine of 970 million won on Hyundai Heavy Industries for misappropriating the subcontractor’s technical data.

The upper limit of fines for technical data misappropriation was raised from 500 million won in 2018 to 1 billion won. This case is the first since the maximum fine increase and represents the highest fine ever imposed.

According to the Fair Trade Commission, Hyundai Heavy Industries developed a diesel engine in 2000 and localized the piston used in this engine in cooperation with subcontractor A in 2005. Company A, established in 1975, is a specialized company in engines, railway locomotives, and power plant engines, and is one of the world’s top three piston makers alongside Germany’s Mahle and Kolbenschmidt. Company A was also selected as one of the '100 Strong Small and Medium Enterprises in Materials, Parts, and Equipment' by the Ministry of SMEs and Startups in response to Japanese export regulations.

Hyundai Heavy Industries had been the sole domestic recipient of pistons from Company A until the end of 2016 after localizing the piston in 2005. However, to reduce its own costs, Hyundai Heavy Industries requested a piston quotation from a third company, Company B, and conducted due diligence, discovering deficiencies. To address these, Hyundai Heavy Industries provided Company B with Company A’s technical data.

Hyundai Heavy Industries claimed that the data provided to Company B was merely a rearrangement of specifications and was given only as a simple form reference. However, according to the Fair Trade Commission’s investigation, the technical data provided to Company B included not only specifications but also Company A’s process sequences and process management plans for quality control.

Hyundai Heavy Industries proceeded with dual sourcing with Company B, which had received Company A’s technical data, and after completing dual sourcing, pressured Company A to reduce prices by about 11% over three months. Eventually, Hyundai Heavy Industries cut off transactions with Company A within a year after dual sourcing.

The Fair Trade Commission judged that Hyundai Heavy Industries’ acts of requesting technical data without justifiable reasons and failing to provide written documents at the time of the request were illegal.

Moon Jong-sook, head of the Fair Trade Commission’s Technical Misappropriation Monitoring Team, said, "This is the first case of a fine imposed for technical data misappropriation based on the new fine notification issued in October 2018, which raised the standard fine amount." She added, "Such measures are expected to raise awareness among businesses and significantly contribute to eradicating technical data misappropriation."

Meanwhile, the Fair Trade Commission had already filed charges against the corporation and its executives last October at the request of the Prosecutor General regarding the same matter.

This content was produced with the assistance of AI translation services.