The Fair Trade Commission (FTC) announced today (August 30) that it has issued a corrective order and imposed a fine of 500 million won on Kyungdong Navien for violating the Fair Subcontracting Transactions Act.
Kyungdong Navien, a household heating appliance manufacturer, created its own very similar drawings based on temperature sensor drawings—heating appliance parts supplied by a subcontractor—without any consent or consultation.
The company was found to have subsequently provided these self-created drawings to the subcontractor's competitor.
It was revealed that Kyungdong Navien engaged in this practice to dualize its suppliers in order to reduce component purchase costs.
Additionally, the investigation showed that in the process of requesting technical data from the subcontractor, Kyungdong Navien failed to issue 12 written request documents and neglected to retain 10 written technical data documents that had been provided.
Under the Subcontracting Act, when requesting technical data, companies must issue a statutory document containing legally required details, such as the purpose of the request, ownership of rights, and compensation.
Furthermore, technical data request documents must be retained for seven years from the end date of the subcontracting transaction.
The FTC plans to closely monitor technology misappropriation targeting small and medium-sized enterprises to ensure that subcontractors' technical data is not unfairly utilized for cost reduction or changes in business partners by prime contractors.
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