- Penalized for Illegally Providing Subcontractor Technical Data to Third Parties to Cut Costs -
The Korea Fair Trade Commission (hereinafter referred to as the KFTC) has uncovered violations of the Fair Transactions in Subcontracting Act (hereinafter referred to as the Subcontracting Act) by Kiturami Co., Ltd. and Kiturami Holdings Co., Ltd. for their misappropriation of technical data. The KFTC has issued corrective orders, referred both companies to the prosecution, and imposed a provisional fine of 954 million KRW on Kiturami.
Kiturami Co., Ltd. is a manufacturer of boilers and HVAC equipment, while Kiturami Holdings Co., Ltd., the holding company of the Kiturami Group, handles purchasing tasks on behalf of Kiturami Co., Ltd.
Details of the Violation
Kiturami and Kiturami Holdings were found to have misused subcontractor technical data to reduce the purchase price of parts supplied by subcontractors. They illegally provided subcontractor technical data to third parties and commissioned the development of identical products using that data.
Specifically, between July 2020 and March 2021, Kiturami Holdings provided 32 technical documents (referred to as "approval documents") from a subcontractor supplying sensors to a competing company based in China. This technical data included product structures, specifications, and detailed designs. The Chinese company subsequently succeeded in developing some of these sensors and began supplying them to Kiturami in 2021.
Sensors: Components used to detect the temperature of heating water and exhaust gases, the wavelength of combustion flames, and the water level in heating systems.
Approval documents: Documents submitted by subcontractors before manufacturing commissioned products. These include details such as structure, specifications, drawings, and types of components.
Additionally, in May 2022, Kiturami provided two technical documents from another subcontractor that supplied motors to a domestic competitor. The competitor successfully developed the motor and entered the market.
Motors: Components that rotate fans to facilitate heat exchange between outdoor units and external air in air conditioning systems.
Additional Violations
The KFTC also found that Kiturami and Kiturami Holdings failed to issue written requests detailing the purposes of their technical data requirements when demanding 46 technical documents from subcontractors.
Significance and Future Actions
This case represents an important enforcement action stemming from a self-initiated investigation. It penalizes the unlawful provision of subcontractor technical data to third parties and the failure to issue written requests for technical data. The KFTC expects this action to deter similar violations and promote compliance within the industry.
The KFTC plans to continue monitoring technical misappropriation practices that fundamentally harm subcontractor competitiveness. It will also actively work to prevent violations through ongoing enforcement and educational initiatives.