FTC Investigates Carmakers’ Subcontracting Deals


The Fair Trade Commission (FTC) is investigating all domestic automakers on suspicion of applying pressure on subcontractors to lower auto parts’ prices.


The antitrust regulator said yesterday its inspectors have launched a full-fledged probe into the five major carmakers _ Hyundai Motor, Kia Motors, GM Daewoo Auto & Technology, Ssangyong Motor and Renault Samsung.


The FTC said some of them have habitually pressed auto parts suppliers into cutting prices on products by abusing their power as contractors.

``Compared to conglomerates in other industries, carmakers are suspected of more frequently calling for small- and mid-sized enterprises to lower prices of materials to be supplied,’’ an FTC official said.


Noting that the investigation is based on the FTC’s survey results on SMEs in charge of auto parts supply during the first half, it said the investigation will go on until next year.


The official said the companies implicated in anti-trust law violation would be subject to penalties amounting to twice the auto parts costs.

Aside from the automobile sector, the FTC is similarly probing other industries under its commitment to preventing strong-arm tactics by conglomerates in SME trading.

The regulator conducted similar probes into the steel and chemical sectors last year and checked up on IT companies in the third quarter this year.


- Source from The Korea Times (Dec  02, 2005) -