S. Korean govt to apply stricter rules on foreign M&A to prevent tech theft

2019.01.03 14:24:41

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The South Korean government will step up oversight on technology leaks by toughening rules on cross-border merger and acquisitions (M&A) of Korean firms and strengthening punishment.

The government on Thursday announced a set of measures that the Ministry of Trade, Industry and Energy, Korean Intellectual Property Office and Ministry of Justice has arranged to protect industrial technology from being stolen. Under the new regulations, foreign firms should receive government permission to take over local companies who obtain key national technologies with support from the government. Currently, they just need to report their deals to the Korean government.

Korean firms who develop new technologies without government support should also report their M&A deals with overseas firms to the authorities, which is currently not a requirement.

Those who leak core national technologies or trade secrets intentionally to foreign firms will be slapped with heavier punishments including fines of up to three times the damages incurred. The government also decided to revise the law to expand the confiscation scope to include all proceeds gained by technology theft and trade secret leakages.

Minimum punishment for national technology leakages will also be raised to jail sentence of at least three years. In addition, the government has decided to broaden the area subject to the new rules from current 64 technologies under 12 sectors to include newly emerging technologies such as artificial intelligence and new materials.

The leakage of key national technologies to foreign companies has emerged as a big threat to the country’s leadership in technology. In June, several officials, including a former researcher at a local supplier of Samsung Display Co. and a Chinese national, were indicted for allegation to try to sell national core technologies to China.

The repeated leakage of core national technologies has narrowed the technology gap between Korea’s tech giants and late commers in other countries, especially China, in the sectors of shipbuilding, semiconductor and display.

By Lim Sung-hyun and Choi Mira

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