Watchdog to fine Celltrion $469,000 over unfair subcontracting practices

Seoul: South Korea's antitrust watchdog said on Thursday it will impose a 630 million-won ($469,000) fine on Celltrion, a biotechnology firm, for unfairly cancelling orders and failing to provide a subcontractor with required documents on time.

The Fair Trade Commission (FTC) said it will also issue a corrective order against the company over violations related to COVID-19 test kits with a local subcontractor, reports Yonhap news agency.

Of the total fine, 590 million won will be imposed for unfair order cancellations and 40 million won for failing to meet documentation requirements.

According to the FTC, Celltrion placed seven orders for COVID-19 test kits between September 2021 and January 2022.

The company failed to issue legally required documents when changing the types of products in two orders and delayed issuing documents for another.

In one case, Celltrion changed some of the point-of-care (POC) test kits for medical professionals to over-the-counter (OTC) kits for general consumers, before switching some of those kits back to POC products.

The FTC said the Fair Transactions in Subcontracting Act requires prime contractors to provide the required written documents before subcontractors begin work on initial or revised orders.

Celltrion also unilaterally cancelled orders for 37.17 million undelivered test kits when it terminated a supply contract on December 26, 2022, despite no fault by the subcontractor, the watchdog said.

The law prohibits prime contractors from arbitrarily cancelling or altering manufacturing orders unless the subcontractor is at fault. The FTC said it will continue to crack down on unfair subcontracting practices.

Meanwhile, the labour ministry here said it plans to fine e-commerce giant Coupang and its subsidiaries a combined 1.96 billion won ($1.5 million) for more than a hundred labour and workplace safety violations.

The ministry said its inspection of the online retailer, its logistics units -- Coupang Fulfillment Services and Coupang Logistics Services -- and its logistics centres found a combined 206 labour and workspace safety violations, reports Yonhap news agency.

The ministry decided to take legal action for 61 violations, such as absence of safety measures for conveyor belts, and impose fines for the rest, which include failures or delays in submitting industrial accident reports to local labour authorities.

Other violations subject to fines include failures to conduct special health checkups for night shift workers and improper management or installation of break facilities.

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