South Korea court cuts Hanwha Ocean antitrust fine to $560,000

The Supreme Court of Korea on Sept. 30 finalized a ruling reducing an antitrust penalty against Hanwha Ocean to 746 million won ($560,000), slashing an initial 15.3 billion won fine by 95%.

The decision by the top court closes six years of litigation between the country's antitrust watchdog and the shipbuilder, formerly named Daewoo Shipbuilding & Marine Engineering. Hanwha Group acquired the company in May 2023.

The Korea Fair Trade Commission originally levied the 15.294 billion won fine in November 2020. The penalty targeted alleged subcontracting abuses across commercial vessel and offshore plant construction projects between 2015 and 2019.

The commission had accused the shipbuilder of delaying written contracts for 186 in-house subcontractors across 16,681 work orders. The regulator asserted that agreements were routinely issued after fabrication had already started.

Regulators also cited 1,471 modification work orders across 91 domestic vendors where the shipbuilder allegedly calculated labor hours below manufacturing costs. That practice deprived small suppliers of approximately 1.2 billion won in compensation, according to the initial sanction.

The antitrust agency also penalized the shipbuilder for unilaterally altering or canceling 111,150 component manufacturing orders with 194 external suppliers. The regulator referred the company to state prosecutors alongside the fine.

The legal dispute unraveled after the company filed an administrative lawsuit against the watchdog. In July 2025, the Fair Trade Commission canceled 5.127 billion won of the fine on its own authority.

The commission took that administrative step after finding it had misapplied penalty calculation guidelines enacted during a 2016 statutory revision. That self-correction reduced the disputed surcharge balance to roughly 10.2 billion won.

The Seoul High Court then vacated almost all remaining fines tied to order cancellations and price-setting violations. The appellate judges concluded that the shipbuilder could not be held liable for contract cancellations caused by supplier insolvency.

The high court also found that several order alterations had occurred through mutual commercial consent between the shipbuilder and its vendors. The bench preserved only a small portion of penalties related to delayed contract issuance.

The Supreme Court's Third Division, led by Presiding Justice Oh Seok-joon, upheld that appellate finding without modification. The final verdict left the enforceable fine at 746 million won.

The judgment marks another courtroom reversal for the Fair Trade Commission's enforcement against large industrial groups. Courts have dismantled several headline antitrust penalties over evidentiary flaws during the past two years.

The Seoul High Court in April vacated an entire 234.9 billion won fine against Samsung Group affiliates over in-house cafeteria service contracts. The Supreme Court likewise struck down a 64.7 billion won penalty against baking conglomerate SPC Group.

Antitrust surcharges carry immediate operational consequences for Korean shipbuilders competing for state naval procurement contracts. Defense acquisition scoring penalizes shipyards that accumulate compliance demerits and regulatory sanctions.

Hanwha Ocean books commercial LNG carriers and naval frigates at its Geoje shipyard. The reduction of the regulatory penalty removes an administrative dispute that had clouded the yard's compliance scorecards.

The ruling limits secondary exposure for suppliers that filed civil damages claims against the shipbuilder in 2021. Those private lawsuits leaned on the commission's administrative findings to establish liability.

The court record does not state whether the Fair Trade Commission will appeal related civil evidentiary findings, and the commission has not published revised enforcement benchmarks.

The ruling takes immediate legal effect, and the commission must adjust its remaining administrative records before its annual audit review in October.