The Fair Trade Commission has said it identified (18 November) violations of the Act on the Promotion of Fair Subcontract Transactions by Kyungdong Navien Co. and its holding company Kyungdong Navien Holdings. The companies engaged in acts of technology misuse and unfair practices. As a result, the FTC issued corrective orders, filed a complaint with prosecutors, and imposed a fine of KRW 954 million (USD 683,185 ) on Kyungdong Navien.
Background of the Companies:
- Kyungdong Navien Co. manufactures boilers, heating, and cooling systems.
- Kyungdong Navien Holdings is the group’s holding company and also oversees procurement operations for Kyungdong Navien Co.
Kyungdong Navien and Kyungdong Navien Holdings misused subcontractors’ technical data to reduce component procurement costs. They unfairly provided this data to third parties and requested them to develop identical products.
Violation details:
- Sensor Technology Leak (2020-2021)
- Between July 2020 and March 2021, Kyungdong Navien Holdings provided 32 technical documents (referred to as approval documents) related to sensors supplied by a subcontractor to a competing Chinese company.
- The Chinese company successfully developed some of these sensors and began supplying them to Kyungdong Navien in 2021.
- Sensors: Components used to detect water temperature, exhaust gas, combustion flame wavelengths, and water levels in boilers.
- Approval Documents: Technical specifications provided by subcontractors before production, including product structure, specifications, detailed diagrams, and components.
- Motor Technology Leak (2022)
- In May 2022, Kyungdong Navien provided two technical documents related to motors supplied by a subcontractor to a domestic competitor.
- The domestic competitor subsequently succeeded in developing the motors.
- Motors: Components that rotate fans to facilitate heat exchange in air conditioning systems.
Additional Violations
The FTC also uncovered that Kyungdong Navien and Kyungdong Navien Holdings demanded 46 instances of technical data from subcontractors without issuing written requests specifying the purpose of such demands, as required by law.
Source: https://www.ftc.go.kr/www/selectReportUserView.do?key=10&rpttype=1
