SMEs Ministry Requests Fair Trade Commission to File Charges Against Doowon Climate Control and Hyundai Kefico

Unauthorized Leakage of SME Technical Data

The Ministry of SMEs and Startups announced on October 1 that it held the 31st Mandatory Accusation Request Deliberation Committee and decided to request the Fair Trade Commission to file charges against Doowon Climate Control and Hyundai Kefico for violating the Subcontracting Act.

The two companies, Doowon Climate Control and Hyundai Kefico, are being reported for violations of the Subcontracting Act, including providing and misappropriating technology data from small and medium-sized enterprises to third parties. Doowon Climate Control, a specialized manufacturer of automotive air conditioning systems, commissioned the production of molds necessary for vehicle heating and cooling devices to seven subcontractors, but failed to provide a written request for technical data.

Additionally, while receiving 17 mold drawings from five subcontractors, the company did not sign confidentiality agreements. Doowon Climate Control also provided five mold drawings to its overseas affiliates without separate agreements with three subcontractors. When one subcontractor refused to repair a mold due to payment settlement issues, the company provided one mold drawing to a competing business without consent, enabling the repair. For these violations, Doowon Climate Control received an order to prevent recurrence and was fined 390 million won by the Fair Trade Commission in June.

Hyundai Kefico, an affiliate of Hyundai Motor Company that manufactures motor controllers for electric vehicles and other automotive engine parts, also commissioned the production of automotive parts molds. The company requested mold drawings from subcontractors without justifiable reasons and failed to provide a written request for technical data. Furthermore, the company did not sign confidentiality agreements when receiving the drawings.

When one subcontractor declined a proposal to jointly enter the Vietnamese market, Hyundai Kefico provided five pieces of the subcontractor’s technical data to a local supplier on two separate occasions without prior agreement. During the process of signing the mold production contract, the company also imposed a special clause that unilaterally required only the subcontractor to maintain confidentiality. For these violations, Hyundai Kefico received an order to prevent recurrence and was fined 474 million won by the Fair Trade Commission in July.

The Ministry of SMEs and Startups considers the failure of a prime contractor to provide written requests for technical data or to sign confidentiality agreements when requesting such data from subcontractors as typical violations that must be eradicated, as they cannot prevent future misappropriation of technology. The ministry also decided to request charges, noting that providing or misappropriating technology received from subcontractors to third parties constitutes an unfair trade practice that could inflict significant damage on SMEs by depriving them of the results of years of know-how and severely hindering technological innovation.

Choi Wonyoung, Director General for Small Business Policy at the Ministry of SMEs and Startups, stated, "The mandatory accusation request system is a policy designed to protect SMEs from unfair trade practices by prime contractors in a superior bargaining position." "These two cases appear to be representative examples of technology misappropriation that have become routine in the automotive mold industry. We hope that, going forward, all cases of technology misappropriation, including the provision of technical data to third parties, will be eradicated to create a fair trading environment and protect the technology of SMEs," he added.

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