The Korea Herald


Watchdog sanctions LG Chem for unfair trade practices

By KH디지털2

Published : May 26, 2015 - 14:12

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South Korea's antitrust watchdog said Tuesday that it has sanctioned chemical giant LG Chem Ltd. for unfair trade practices against its subcontractors and called for criminal investigations to be launched.

The Fair Trade Commission said that it has ordered LG Chem, one of the world's largest manufacturers of rechargeable batteries, to pay 141 million won ($128,400) in compensation to partners and slapped 50 million won in fines.

"LG Chem unlawfully demanded and used information on a patented battery label production process from one of its subcontractors, and retroactively lowered prices for flexible printed circuit boards supplied by another company," the regulator said.

In the case of the battery label infringement, LG Chem sent the technology and materials used in the making of products for notebook PCs and mobile phones to its subsidiary in China and then cut off business ties with its local subcontractor in December 2013, a few months after its Chinese operation started making the labels.

Concerning the lowering of prices for F-PCB, the FTC said there was mutual agreement on price adjustment, but this did not mean such measures can be backdated to benefit LG Chem at the expense of the subcontractor.

In addition, the watchdog said LG Chem intentionally did not issue a formal and signed contract to a subcontractor and conducted all transactions only via e-mails in clear violation of the country's fair trade regulations.

The FTC said its latest actions marks the first time that it has sanctioned a large company for unlawful use of technology and know how acquired from a business partner. Related laws were passed in January 2010.

"By fining and asking state prosecutors to conduct a probe against LG Chem, the authorities are sending a clear message it will not tolerate big companies abusing their superior positions vis-a-vis smaller partners," an official source said.

The watchdog will continue to keep tabs on big companies that request technology from subcontractors and mark down prices of products they buy in violation of fair trade rules, he added. (Yonhap)