The Korea Fair Trade Commission (hereafter referred to as the “KFTC”) announced on the 2nd that it decided to initiate the consent decree process as Hyosung Corporation and Hyosung Heavy Industries Corporation filed for consent decree regarding allegations of violating the Subcontract Act.
The consent decree is a system where a company accused of a legal violation proposes a corrective plan, and the KFTC reviews it, deferring legal judgment and concluding the case upon the plan’s implementation. Hyosung and Hyosung Heavy Industries were accused during the KFTC’s investigation of requesting or using technical data from subcontractors during the subcontracting process.
The KFTC has been investigating the actions of Hyosung and others, viewing them as violations of the Subcontract Act, particularly the act of requesting or using technical data from subcontractors in the production of parts for heavy electrical equipment. This industry includes power facilities and motor equipment used in power generation, transmission, and distribution.
After receiving the review report from the KFTC, Hyosung applied for the consent decree in March 2025. The company presented a corrective plan to improve trading order and maintain cooperative relationships with subcontractors.
The plan submitted by Hyosung includes establishing a system related to the procedures for requesting technical data, systematically managing confidentiality agreements, preparing guidelines for subcontract-related tasks, conducting regular training, and providing equipment support to subcontractors to enhance quality and improve working environments.
In addition, Hyosung announced plans to support research and development (R&D), joint research with universities, and acquisition of domestic and international certifications for key partner companies, planning to invest approximately 3 billion KRW in the overall implementation plan.
The KFTC judged that Hyosung’s corrective plan is effective in improving trading order and protecting subcontractors. It also decided to initiate the consent decree process considering there was no evidence that Hyosung deliberately disrupted the subcontracting order, and no financial harm occurred to subcontractors.
Recognizing that the heavy electrical equipment industry is growing due to the expansion of the power grid and renewable energy, the KFTC determined that it is more desirable for companies to independently improve their trading structures and enhance technological competitiveness than to impose legal sanctions.
This is the first case where the consent decree process is initiated concerning the prohibition of technical data provision demands since the introduction of the consent decree system in the Subcontract Act in July 2022.
The KFTC plans to further elaborate the corrective plan with Hyosung, gather opinions from stakeholders, and consult with relevant agencies, before presenting the final consent decree plan to the commission for decision on whether to approve it.