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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] Hyosung Corp. and Hyosung Heavy Industries have agreed to provide a total of 3.43 billion won (approximately $2.6 million) in support for subcontractors instead of facing sanctions from South Korea’s Fair Trade Commission (FTC) over allegations of technology misuse.
The FTC announced on March 4 that it had finalized a consent order related to suspected violations of the subcontracting law by Hyosung and Hyosung Heavy Industries.
The two companies had been accused of improperly using technical materials—including 2D and 3D original drawings—belonging to 12 subcontractors between 2020 and 2022.
The FTC determined that it would be more appropriate to implement measures that provide tangible benefits to subcontractors rather than formally confirming a legal violation, taking into account that no actual damages to the suppliers had been identified.
Accordingly, the regulator decided in May last year to initiate consent order proceedings and drafted a provisional settlement plan before gathering feedback from stakeholders and relevant government agencies.
The finalized consent order consists of two main components: measures to restore fair trade practices and prevent recurrence, and programs to support cooperation and shared growth with subcontractors.
Under the agreement, Hyosung will immediately restrict the use of technical materials—such as component drawings provided by subcontractors—to purposes including prior approval and post-inspection. The company also agreed to cease requesting such materials without legitimate justification and to stop creating, registering, or managing drawings identical to those submitted by subcontractors.
Hyosung will also improve its internal management system governing requests for technical materials and the execution of confidentiality agreements. The system will be enhanced with a self-inspection function for technical materials and will require the use of standardized forms. To ensure compliance, the companies will conduct regular internal audits and report the results to the FTC.
In addition, Hyosung will prepare and distribute guidelines that clarify the definition, examples, and criteria for determining technical materials, and will notify subcontractors accordingly. The company will also conduct periodic training and evaluations for employees to ensure the corrective measures are properly implemented.
The companies will also conduct regular inspections of technical materials received from subcontractors based on predetermined standards. Any materials that have fulfilled their intended purpose or exceeded their retention period will be disposed of.
Separately, Hyosung has prepared a total of 3.43 billion won in cooperation and support measures for subcontractors.
Of this amount, 1.13 billion won will be allocated to support initiatives such as the development of new molds to replace aging ones, component lightweighting, acquisition of safety certifications, and industry-academia cooperation programs.
Another 2.3 billion won will be provided to improve working conditions and safety at subcontractors. The funds will be used to purchase equipment aimed at enhancing quality and productivity, as well as for improving workplace conditions and acquiring safety-related facilities.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
