Hyundai Heavy fined for exploiting contractor's tech data

By Nam Hyun-woo

The Fair Trade Commission (FTC) said Sunday that it had imposed a 970 million won ($805,647) fine on Hyundai Heavy Industries for exploiting technology data on piston manufacturing owned by a contractor in order to diversify its suppliers and save costs.

In 2000, Hyundai Heavy developed the HiMSEN diesel engine and asked Samyoung Machinery to produce pistons for it to replace imports. The latter began exclusively supplying pistons to the shipbuilder from 2005.

But in March 2015, Hyundai Heavy tried to diversify its suppliers by giving an order to another piston-making company ― whose identity was withheld. As the quality of the pistons from the new company was unsatisfactory, Hyundai Heavy coerced Samyoung to give it the data on the pistons, such as assembly instructions and other standard procedures. Hyundai then promptly handed them to the other company, according to the FTC.

After the other company managed to produce satisfactory pistons, in an abuse of power Hyundai Heavy then demanded that Samyoung cut its prices if it wanted to continue supplying its products. Samyoung reduced its prices by 11 percent from December 2015 to February 2016, but despite this, Hyundai Heavy “unilaterally” ended its contract at the end of 2016, the FTC said.

The commission said Hyundai Heavy threatened Samyoung that it would cancel its contract if it refused to hand over the trade secrets.

Hyundai Heavy claimed it did not give the data to the other company, but the FTC said it found identical mistakes multiple times in files belonging to Samyoung and the unidentified company ― for example writing “nut” instead of “bolt.”

The FTC transferred the case to the prosecution last October, following its audit at the National Assembly where it issued strong criticism of Hyundai Heavy.

The prosecutors indicted Hyundai Heavy on some charges while dropping others.

The fine against Hyundai Heavy is the largest the FTC has imposed for “exploiting trade secrets.”

Last year, Hyundai Heavy was fined 431 million won for exploited a contractors' technology data on construction equipment.