Ministry of SMEs and Startups Gains Authority to Conduct Ex Officio Investigations and Issue Correction Orders on Unfair Consignment and Subcontracting Transactions

Enforcement of the Act on Promotion of Mutual Growth between Large and Small-Medium Enterprises

[Asia Economy Reporter Kim Bo-kyung] The Ministry of SMEs and Startups will be able to conduct ex officio investigations and issue corrective orders for unfair consignment transactions in the future.

The Ministry of SMEs and Startups announced on the 20th that the amended "Act on the Promotion of Mutual Cooperation between Large Enterprises and Small and Medium Enterprises," which includes these provisions, will be enforced starting from the 21st.

The Ministry expects that by gaining the authority to conduct ex officio investigations and issue corrective orders in the consignment transaction areas not protected under the Subcontracting Act overseen by the Fair Trade Commission, the blind spots in protecting small and medium enterprises will be minimized.

The Ministry's corrective order targets include ▲failure to issue agreements or goods receipt certificates ▲non-payment of delivery fees ▲refusal or neglect to adjust or negotiate delivery fees due to changes in supply costs ▲unjust reduction of delivery fees ▲setting fees significantly lower than the usual price ▲and unjustified suspension of orders.

If such illegal acts are discovered, the Ministry can order corrective measures such as payment of delivery fees. Companies that refuse to comply will be publicly disclosed, and if they fail to comply with the corrective order within one month after disclosure, they may face imprisonment of up to one year or a fine of up to 50 million won.

The amended law added the Korea Federation of SMEs as an entity that can negotiate with the consignor on behalf of the consignee when adjustment of delivery fees is inevitable due to changes in supply costs such as material or labor costs.

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