Chaebol face higher fines for stealing technology

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Chaebol face higher fines for stealing technology

The Fair Trade Commission announced higher fines on Thursday against conglomerates that steal technologies from their contractors.

The government watchdog is allowing victims of theft to request fines of up to 10 times the technology’s worth from the current three. Contractors and other parties will be entitled to file complaints directly to the prosecution for alleged intellectual property theft.

Before, the Fair Trade Commission or another government agency had to initiate an investigation and refer the case to prosecutors.

The government watchdog vowed to regularly assess whether conglomerates, also known as chaebol, are abiding by the rules through biennial investigations. Companies that place unfair demands on their smaller partners will be banned from signing exclusive contracts with them. The Fair Trade Commission said the rules will take effect early next year.

Conglomerates frequently face accusations of delaying payments or undercutting their contractors. Policymakers have blamed the practice for putting smaller businesses in tough circumstances and dampening overall growth of the economy.

Under the commission’s new rules, conglomerates will be banned from requesting information on the original prices of parts provided by their contractors. The watchdog said some conglomerates will ask for the information to pressure contractors into lowering their prices.

“The new measures are aimed at protecting small and midsize companies from the beginning to end of a contract,” said Kim Sang-jo, chairman of the Fair Trade Commission.

The measures are in line with the government’s recent move to regulate the nation’s large companies for failing to fulfill their “social responsibility” and employing “unfair business practices” against small and medium-sized companies. Some policymakers have blamed such practices for squeezing the bottom line of smaller companies and widening the profit gap between large companies with high earnings and small businesses making scraps.

Earlier, the Fair Trade Commission vowed to carry out sweeping reform to root out unfair business practices and strengthen consumer protection.

The commission said it would impose fines of up to three times the losses incurred by illegal business practices that occur between large distributors and their smaller partners, such as unfair payments and returning goods without compensation.

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