Hyosung (004800) has agreed to reform its practices regarding technology data requests from subcontractors and provide approximately ₩3.4 billion in mutual growth cooperation funds. The corrective measures were offered in exchange for exemption from regulatory sanctions related to allegations of improper technology data requests.
The Fair Trade Commission (FTC) announced on the 4th the finalized consent decree for Hyosung Co., Ltd. and Hyosung Heavy Industries (298040) regarding alleged violations of the Fair Subcontracting Transactions Act.
A consent decree is a system that concludes cases without determining illegality when the FTC deems corrective measures proposed by a company to be reasonable. This decision marks the first application of the consent decree system to a technology misappropriation case since its introduction to the Subcontracting Act in July 2022. Hyosung had been under investigation for requesting and using subcontractors' technical data during the outsourced manufacturing process for products including electric motors.
Under the finalized agreement, Hyosung will use technical data received from subcontractors solely for prior approval and post-delivery inspection purposes. The company will cease all requests for data without legitimate cause and discontinue drawing creation, registration, and management activities. All technical data that has fulfilled its purpose or exceeded its retention period will be destroyed.
Additionally, Hyosung will contribute over ₩3.4 billion in mutual growth and cooperation funds. Subcontractors subject to the technology data requests will receive ₩1.129 billion for initiatives including aging mold development, parts weight reduction, safety certification acquisition, and industry-academia cooperation support. Another ₩2.3 billion has been allocated for workplace environment and safety improvements.
All 12 major subcontractors reportedly expressed preference for practical support measures over punitive sanctions during the FTC's opinion-gathering process on the consent decree. The largest fine ever imposed by the FTC in technology misappropriation cases stands at approximately ₩2.6 billion.
An FTC official said, "This case has fundamentally improved industry practices and secured funding to provide prompt support to subcontractors," adding, "We expect this to establish itself as a practical mutual growth model for the entire subcontracting ecosystem going forward."