It was confirmed on the 9th that the Fair Trade Commission conducted back-to-back on-site investigations into LIG Nex1 and Hyundai Rotem in connection with alleged power abuse in subcontracting in the defense industry. Earlier, the Korea Fair Trade Commission (FTC) conducted on-site investigations last month at Hanwha Aerospace and Korea Aerospace Industries (KAI). With this, all four of Korea's major defense conglomerates were those surveyed by the Korea Fair Trade Commission (FTC).
According to ChosunBiz reporting, the Korea Fair Trade Commission (FTC) on this day dispatched a Researcher to LIG Nex1's headquarters and began procedures to verify alleged violations of the Fair Transactions in Subcontracting Act. LIG Nex1 is suspected of demanding technical data from some parts partners during the transaction process and then siphoning it off. It is also suspected of repeatedly delaying payments and demanding price cuts.
The Korea Fair Trade Commission (FTC) was also said to have conducted an on-site investigation into Hyundai Rotem's headquarters last week. Hyundai Rotem likewise faces suspicions of demanding the submission of technical data from subcontractors or unilaterally adjusting prices, as well as suspicions of delaying or failing to pay subcontracting fees.
As a result, all four of Korea's major defense conglomerates became those surveyed by the Korea Fair Trade Commission (FTC) over alleged power abuse in subcontracting. Earlier, in Nov., the Korea Fair Trade Commission (FTC) conducted on-site investigations into Hanwha Aerospace and Korea Aerospace Industries (KAI). (☞Fair Trade Commission conducts on-site investigation into Hanwha Aerospace and KAI over defense industry "alleged power abuse in subcontracting") The Korea Fair Trade Commission (FTC) was also said to be looking into alleged violations of the Monopoly Regulation and Fair Trade Act in connection with KAI.
The Korea Fair Trade Commission (FTC)'s on-site investigations follow President Lee Jae-myung's remarks that the government would strongly crack down on unfair practices in the defense industry. At the "defense industry strategy meeting" held in Oct., President Lee Jae-myung said, "As massive tax money is injected into the defense sector, if large companies engage in unfair practices such as undercutting costs or stealing technology, we will impose strong sanctions."
An official at the Korea Fair Trade Commission (FTC) said, "It is difficult to confirm specific details about an ongoing investigation."