The Korea Fair Trade Commission said on the 6th that it imposed a 432 million won penalty surcharge on CERAGEM Co. and ordered corrective action for passing subcontractors' technical data to its Chinese affiliate. CERAGEM Co. manufactures medical devices, including massage chairs.
According to a Korea Fair Trade Commission (FTC) investigation, CERAGEM Co. commissioned 12 subcontractors to produce molds needed to make massage chairs and other products. At the same time, it set a special clause unilaterally assigning to itself, without compensation, the technical data prepared by the subcontractors. This conduct continued from Aug. 2019 to Jan. 2024. In subcontracting transactions, an agreement that unilaterally assigns to the prime contractor the rights to the subcontractor's technical data is a representative unfair special clause defined in the FTC's "notice on unfair special clauses."
CERAGEM Co. also demanded and obtained 33 drawings from three subcontractors from Dec. 2021 to Aug. 2023 for the purpose of local development by its overseas affiliate, Tianjin CERAGEM Medical Equipment Co., Ltd. Tianjin CERAGEM Medical Equipment Co., Ltd. is CERAGEM Co.'s Chinese subsidiary. CERAGEM Co. transferred seven drawings to the Chinese subsidiary without a separate agreement with the subcontractors.
Accordingly, the Korea Fair Trade Commission (FTC) applied allegations of violating Article 3-4 of the Fair Transactions in Subcontracting Act, which prohibits setting unfair special clauses, and Article 12-3 of the same act, which prohibits demanding the provision of technical data. The Korea Fair Trade Commission (FTC) said, "Going forward, to establish order in subcontracting transactions, we will closely monitor acts of assigning ownership through unfair special clauses and acts of demanding or misusing technical data without justifiable reason based on such clauses."