Five Companies Violating Subcontracting Act and Franchise Business Act Referred to Prosecutors by Fair Trade Commission
Request for Investigation Against Hyupsung Construction, Isu Construction, Ncat, Korea McDonald's, Hanam F&B, and Others
[Asia Economy Reporter Kim Cheol-hyun] The Ministry of SMEs and Startups (Minister Park Young-sun, hereinafter referred to as the Ministry) announced on the 4th that it held the "11th Mandatory Prosecution Request Deliberation Committee" and decided to request the Fair Trade Commission (hereinafter referred to as the FTC) to prosecute five companies, including Hyupsung Construction, Isu Construction, Ncat, Korea McDonald's, and Hanam F&B, for violating the Subcontracting Act and the Franchise Business Act.
The five companies requested for prosecution this time were investigated to have caused significant damage to small and medium enterprises (SMEs) and franchise applicants by demanding unfair economic benefits in subcontracting transactions with SMEs or by providing false and exaggerated information to franchise applicants and concluding franchise contracts. A Ministry official explained, "Unfair trade practices by consignment companies and franchise headquarters are still ongoing, and similar violations are repeatedly occurring," adding, "We made this decision because it is necessary to prevent recurrence of similar acts and to raise awareness in the same industry through this prosecution request."
In particular, the Ministry added, "Serious unfair practices such as demanding unfair economic benefits when concluding subcontracting contracts and chronic unfair practices such as providing false and exaggerated information when concluding franchise contracts will be dealt with more strictly."
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Meanwhile, since the implementation of the mandatory prosecution request system in January 2014, the Ministry has requested prosecution for a total of 30 cases including this one, and plans to hold the Mandatory Prosecution Request Deliberation Committee regularly once every quarter this year to more actively request prosecution of companies engaging in unfair trade practices.
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