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Stealing tech gets harder for conglomerates

Sept 09,2017
The government is tightening its monitoring of conglomerates to prevent them from stealing technology and ideas from smaller businesses, an area of crime that has been vastly overlooked.

The Fair Trade Commission and the ruling Democratic Party agreed on Friday to discuss methods to stop conglomerates from manipulating or forcing SMEs to surrender technology.

“Until now, because of a lack of resources,” FTC Chairman Kim Sang- jo said, “there has been a limit to handling issues related to technologies extortion.”

The first step the FTC will be taking is creating a department that will exclusively focus on cases involving technology theft and leaks. The team will conduct investigations even when the victimized companies do not report cases to the FTC.

In other words, the antitrust agency will first study smaller partners of conglomerates and then conduct preliminary investigations. This is to ease the burden on SMEs, which in many cases are reluctant to report cases due to their business relations with conglomerates.

In fact, one study showed that 63 percent of SMEs that have seen their technologies extorted took no actions so that their business relations could continue.

Next year, the first industries that will be under investigation will be machinery and automobile industries, followed by electric, electronics and chemical industries. The software industry will be investigated from 2020.

The antitrust agency has also decided to raise the level of penalties.

Currently, when a conglomerate is caught stealing technologies developed by SMEs, it has to pay a penalty of up to triple the damages inflicted. The FTC is looking into the possibility of increasing that penalty.

Additionally, under the current system, if the conglomerate passes on the technology to a third party, it is only penalized if proven that the technology was appropriated.

But now, the conglomerate is eligible for punishment just by leaking the technology.

“By aggressively investigating and raising the level of penalty against technology misappropriation activities, we plans to preemptively prevent conglomerates from exercising such practices,” said Chung Jin-wook, Fair Trade Commission director general. “We expect such actions will not only encourage SME technology development but also strengthen the competitiveness of such companies.”

In the past, there have been numerous claims from smaller businesses that had to suffer from conglomerates forcing them to disclose their vital technologies.

According to a study by the Ministry of SMEs and Startups, in the last five years, 644 companies, or 7.8 percent of the total, have seen their technologies being extorted.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]