Korea Fair Trade Commission Initiates Consent Decree Procedures for Hyosung Corporation and Hyosung Heavy Industries Corporation(2025.6.2)

- Final decision on consent decree to be made after hearing stakeholder opinions and committee deliberation -

 

The Korea Fair Trade Commission (KFTC, Chairperson Han Ki-Jeong) has decided to initiate consent decree procedures for Hyosung Corporation and Hyosung Heavy Industries Corporation (hereinafter "Hyosung, etc.") regarding alleged violations of the Subcontracting Act.

 

The 'consent decree system' is a mechanism where a business suspected of legal violations voluntarily proposes corrective measures such as victim relief and improvement of transaction order. If the KFTC, after gathering opinions from interested parties, deems the proposed corrective measures reasonable, it defers judgment on the violation and concludes the case, focusing on the swift implementation of the corrective measures. The process involves: deciding whether to initiate consent decree procedures → preparing a provisional consent decree proposal → gathering opinions from interested parties → deliberating and adopting the final consent decree proposal.

 

The KFTC had been investigating Hyosung, etc. for violations of the Subcontracting Act that occurred during the process of demanding and using technical data from subcontractors when commissioning the manufacturing of heavy electrical equipment components.

 

Heavy electrical equipment refers to all business areas that manufacture power generation (including transmission and distribution) facilities and power machinery (such as motors).

 

After receiving the KFTC's examination report in November 2024, Hyosung, etc. voluntarily applied for a consent decree in March 2025, with the aim of improving subcontracting transaction order with subcontractors, promoting win-win cooperation with them, and achieving continuous shared growth through enhanced competitiveness.

 

Hyosung, etc. proposed corrective measures to improve subcontracting transaction order, including: ① establishing and operating a system for technical data requests and non-disclosure agreement management, and ② establishing new operational guidelines and providing regular training. They also proposed subcontractor support measures such as ③ providing equipment support for quality improvement and working environment enhancement.

 

Furthermore, they expressed their intention to prepare implementation plans totaling approximately 3 billion Korean Won, which includes ④ additional support for R&D, industry-academia cooperation, and domestic and international certification acquisition to foster mutual growth with key component suppliers.

 

Accordingly, the KFTC decided to initiate the consent decree procedures, comprehensively considering factors such as the nature of the case, the effect of establishing subcontracting transaction order and protecting subcontractors, the balance between the cost of implementing corrective measures and the expected level of sanctions, and the fact that Hyosung, etc. had no intention of disrupting subcontracting transaction order and no actual monetary damages were confirmed for subcontractors.

 

Moreover, the KFTC also considered that the heavy electrical equipment business sector will continue to grow due to global grid expansion and the spread of renewable energy, leading to more business opportunities. Therefore, it determined that improving the transaction structure and enhancing subcontractors' technological competitiveness through a consent decree, rather than simply imposing sanctions, would better serve the public interest, including the establishment of subcontracting transaction order and the strengthening of subcontractors' competitiveness.

 

This decision marks the first time that consent decree procedures have been initiated in relation to Article 12-3 of the Subcontracting Act (Prohibition of Demanding Technical Data, etc.) since the introduction of the consent decree system to the Subcontracting Act in July 2022. It is expected that if Hyosung, etc., a leader in this business sector, improves its practices regarding technical data demands and usage, the 'technical data protection culture for subcontractors' can be more smoothly established in other manufacturing sectors as well.

 

The KFTC plans to quickly finalize the corrective measures with Hyosung, etc. to prepare a provisional consent decree proposal. This will be followed by gathering opinions from interested parties and consulting with relevant agencies, before re-submitting the final proposal to the committee for a decision on its acceptance.