FTC fines Celltrion 630 million won over unfair test kit subcontracting

Korea’s antitrust watchdog said Thursday it will impose a 630 million won ($469,000) fine on Celltrion, a biotechnology firm, for unfairly canceling 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.

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 test kits for medical professionals to over-the-counter kits for general consumers, before switching some of those kits back to point-of-care 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 canceled orders for 37.17 million undelivered test kits when it terminated a supply contract on Dec. 26, 2022, despite no fault by the subcontractor, the watchdog said.

The law prohibits prime contractors from arbitrarily canceling or altering manufacturing orders unless the subcontractor is at fault.

The FTC said it will continue to crack down on unfair subcontracting practices.

Yonhap