2026.10.30. The Fair Economy — The Fair Trade Commissio has decided to issue a corrective order (to prevent recurrence) and impose a fine of 630 million won (about $450,000) on Celltrion for arbitrarily canceling its subcontract for manufacturing COVID-19 rapid diagnostic test kits, even though the subcontractor was not at fault. When it terminated the supply contract, Celltrion canceled the subcontract for 37.17 million test kits that had not yet been delivered, and it failed to issue a written contract when it changed the items under the agreement. Of the fine, 590 million won (about $420,000) was for the unjustified cancellation of the subcontract and 40 million won (about $29,000) was for violating the obligation to issue a written contract.
The Fair Trade Commissio announced the sanctions on Oct. 29.
Article 8, Paragraph 1 of the Fair Transactions in Subcontracting Act prohibits unjustified cancellation of subcontracts, while Article 3, Paragraph 1 requires a written contract to be issued before work begins. The subcontract cancellation accounted for 94% of the total fine.
Celltrion placed seven orders with Humasis, its subcontractor, to manufacture the kits between September 2021 and January 2022. On Dec. 26, 2022, when it terminated the supply contract, Celltrion canceled the subcontract for 1.86 million kits from the second order and 35.31 million kits from the seventh order without accepting delivery. The Fair Trade Commissio determined that Humasis was not at fault.
The violations over written contracts occurred in the second and seventh orders. The second order was placed on Oct. 21, 2021, for point-of-care (POC) kits for professional use; in January 2022, part of it was switched to over-the-counter (OTC) kits for personal use, and in March 2022, part of that was switched back to POC. The seventh order was placed on Jan. 22, 2022, for OTC kits; in March, part of it was switched to POC, and around May, part of that was switched back to OTC. Celltrion did not issue a single written contract for any of the four changes.
The third order was placed around November 2021, and delivery began on Dec. 1, but Celltrion did not issue a written document specifying the item name, quantity and unit price until Dec. 16. The Fair Transactions in Subcontracting Act requires a primary contractor to issue a written contract before the subcontractor begins work, whenever it places, adds to or changes an order.
The two sides disagree over the delivery deadline. Celltrion maintains that it canceled the subcontract because Humasis missed the deadline. Humasis argues that the deadline should be based on the purchase order, while Celltrion counters that the deadline should be the date Humasis itself said it could produce the kits by. A Fair Trade Commissio official said the case is still in litigation and that the deadline Celltrion claims was not accepted even in the first-instance ruling.
On the same day, Celltrion issued a notice to shareholders saying it would file an administrative lawsuit to contest the fine. The company argued that the matter is a civil dispute arising from a joint business venture and is different in nature from a case to which the Fair Transactions in Subcontracting Act should apply. It said it also plans to seek a ruling on contractual liability and the scope of damages in the ongoing appeal of the civil lawsuit.
Celltrion stressed that the civil court, in its first-instance ruling, acknowledged Humasis's delay in supply and ordered it to pay about 3.89 billion won (about $2.78 million) in liquidated damages for the delay. The civil ruling, however, is a separate proceeding from the Fair Trade Commissio's determination on violations of the Fair Transactions in Subcontracting Act. In the same ruling, the court also did not recognize Celltrion's termination of the contract and ordered it to pay 12.71 billion won (about $9.08 million) in outstanding payments.
Because the violations ended before the revised fine notice took effect on Aug. 4, 2026, the previous notice applied to this case. Under a revision to the enforcement decree of the Fair Transactions in Subcontracting Act that took effect on Aug. 11, the ceiling for increasing or reducing fines was expanded from 50% to 100% of the base calculation standard. The Chosun Daily reported the canceled volume as 3,717 kits, while Yonhap News Agency reported it as 37.17 million kits.
Celltrion and Humasis signed a joint research and product supply agreement on June 8, 2020, to develop, commercialize and supply a rapid COVID-19 antigen test kit. Using an antibody developed by Celltrion, the companies commercialized the Celltrion DiaTrust™ COVID-19 Ag Rapid Test that September, and supplied both POC and OTC versions to the U.S. market through Celltrion's U.S. subsidiary. In October 2021, the companies also signed a supply contract worth 200.5 billion won (about $143 million).
Celltrion said it respects the Fair Trade Commissio's decision itself. However, it argued that timely supply was critical during the COVID-19 pandemic, and that it suffered damage and a blow to its external credibility due to its partner's repeated delays in delivery. The company said it would present evidence in the administrative lawsuit regarding the circumstances of the contract's formation and execution, market conditions during the pandemic, and damages from the delivery delays. It also said it would review its overall processes for contract formation, management of business partners, and contract execution and termination.
Under the revised fine notice that took effect on Aug. 4 this year, the imposition rate for "extremely serious violations" rose from 60-80% to 90-100%. The flat-rate fine standard also rose from 900 million-2 billion won (about $640,000-$1.43 million) to 1.8 billion-2 billion won (about $1.29 million-$1.43 million). Reductions for cooperation during investigation and deliberation, previously 10% each for a total of 20%, were cut to within 10% for cooperating fully at both stages.
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