Korean Trade Commission Fines GTT Over LNG Licensing and Sales Tactics

In a dispute over licensing and sales tactics related to the construction of LNG ships, South Korea’s antitrust regulators took the unusual step of fining France’s Gaztransport & Technigaz S.A. (GTT) for unfair sales tactics and ordering a correction. GTT responded by disputing the decision saying it was an inseparable offering integral to the technology.

The dispute stems from the licensing of LNG technology to South Korea’s eight shipyards which are leaders in the construction of LNG carriers. GTT accounted for 95 percent of the global LNG ship cargo containment systems licensing market based on 2018 sales according to the Koreans giving the French company a lock of the market. 

According to South Korea’s Fair Trade Commission, GTT had licensing agreements with the major shipyards for the patented technology but requiring the shipbuilders to also buy engineering services. The additional services included design, testing, and field inspections. The regulators ruled that this was an unfair trade practice linking the sale of services to the license and filed GTT $11.5 million.

“We expect the fine will improve competition and will lead to better pricing and quality by creating a condition in which new developers will be able to enter the LNG carrier containment system and engineering services market,” the FTC said in announcing its decision.

GTT responded in a written statement saying that it challenges the rationale of the decision and, upon receipt of the KFTC’s written decision, it intends to appeal the decision before the Seoul High Court requesting suspension of the decision. GTT emphasized its belief that the license of the technology and the technical assistance constitute an inseparable offering, which guarantees the integrity of its technologies, and that any separation could be detrimental to the entire LNG carrier industry.

Philippe Berterottière, Chairman and CEO of GTT, was quoted in the statement saying, “We are convinced that our commercial practices comply with the Korean competition rules and that the structuring of our offer, which has contributed for decades to the safe development of LNG maritime transport, makes it possible to provide our shipyard partners with ever more innovative, safe and efficient technologies, for the benefit of the entire industry.”