'530 Companies Voluntarily Improve "Unfair Transactions in Supply and Consignment"... Payment of 3.58 Billion Won'

Ministry of SMEs and Startups, Regular Survey... Win-Win Adjustment Committee

[Asia Economy Reporter Kim Daeseop] #. Mid-sized construction company A entrusted construction work and services to 10 subcontractors but failed to pay approximately 120 million KRW in delayed interest and bill discount fees due to delayed payment of delivery fees. However, through the regular survey on subcontracting transactions, the violation of the law was confirmed, and the company voluntarily improved the situation.

The Ministry of SMEs and Startups announced on the 13th that 530 companies confirmed to have violated the law through measures following the '2019 Regular Survey on Subcontracting Transactions' have voluntarily improved.

This voluntary improvement result for companies violating the law is a follow-up measure based on the discussion at the 4th Win-Win Adjustment Committee held on the 24th of last month. The Ministry of SMEs and Startups conducts an annual regular survey on subcontracting transactions to eradicate unfair trade occurring between subcontracting companies and to encourage the establishment of sound trading practices in the industry.

Accordingly, since November last year, a regular survey has been conducted targeting a total of 12,000 companies, including 2,000 entrusting companies and 10,000 subcontracting companies. Due to the spread of the novel coronavirus infection, only on-site investigations remain. The regular survey proceeds in three stages: 1) investigation of entrusting companies' transaction details, 2) voluntary improvement and subcontracting companies' survey, and 3) on-site investigation.

In this survey, a detailed analysis of the 2019 second quarter subcontracting transaction details of 2,000 entrusting companies, which hold the 'gap' position in transactions, revealed violations of the Win-Win Cooperation Act by 580 companies, including ▲non-payment of delivery fees ▲non-payment of delayed interest, bill discount fees, and bill substitution fees due to delayed payment of delivery fees.

Based on this, the 580 entrusting companies were notified of the legal violations and encouraged to voluntarily improve. As a result, 530 companies (91.4% of all violating companies) responded to voluntary improvement and paid 3.58 billion KRW in damages to subcontracting companies. As of the end of March this year, 50 companies have not responded to voluntary improvement.

Park Jong-chan, Director of the Win-Win Cooperation Policy at the Ministry of SMEs and Startups, said, "Nine out of ten companies violating the law detected through this regular survey have completed voluntary improvement," adding, "It appears that the message of the Win-Win Adjustment Committee, which prioritizes adjustment and mediation over punishment for prompt damage relief, is being realized to some extent in the field."

Park Jong-chan also stated, "We will actively encourage voluntary improvement for the remaining 50 companies that have not yet improved and plan to announce exemplary cases through the Win-Win Adjustment Committee in the future."

This content was produced with the assistance of AI translation services.