Antitrust regulator ordered Kia Motors Corp. to pay subcontractors and fined Hyundai Motor Co. for fair trade violations.
The Korea Fair Trade Commission said in a statement that it fined Hyundai Motor 1.69 billion won (US$1.85 million; EUR1.26 million) and ordered Kia to pay 4.6 billion won (US$5 million; EUR3.4 million) to subcontractors.
The regulator said that from December 2002 to April 2003, Hyundai Motor used its dominant buyer position to force its 26 subcontractors to lower the prices of auto parts they supplied to the carmaker.
Hyundai says the 26 subcontractors were among 77 companies that supplied parts for Hyundai's Click model in 2003, and that massive production of the car led to a drop in overall unit prices.
"After we receive an official notice from the Fair Trade Commission, we will decide whether to pay the fines to the commission or to take any legal action against the decision," said Jake Jang, a Hyundai Motor spokesman.
Kia Motors promised to help 36 subcontractors offset financial damage stemming from the price cut for its Rio small car, sold in South Korea as Pride, and mid-size sedan Optima between June 2003 and December 2005, the commission said.
But Kia Motors failed to follow through on its promise, the regulator said, causing 4.6 billion won in financial damage to the subcontractors. The total included interest of 2 billion won (US$2.2 million; EUR1.5 million).
"We have made up for the losses of 23 subcontractors, and compensation for the remaining 34 suppliers will soon be completed," Kia said in a statement.
Hyundai Motor, the world's sixth-largest carmaker, owns 38.6 percent of Kia.