Fair Trade Commission: "Booyoung Housing Decided Subcontract Payment Lower Than Lowest Bid... Correction Order and Fine"

Booyoung Housing, Violation of Subcontracting Act

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission announced on the 14th that it has decided to issue a corrective order (to prevent recurrence) and impose a fine of 131 million KRW on Booyoung Housing for determining subcontract payments at amounts lower than the lowest bid price without justifiable reasons.

According to the Fair Trade Commission, Booyoung Housing selected subcontractors through a lowest-price competitive bidding method for 11 construction projects, including the "Hwaseong Hyangnam B7 Block Booyoung Apartment New Construction Landscaping Planting Work," from March 9, 2016, to June 11, 2018.

During this process, despite no justifiable reasons such as the lowest bid price not exceeding their own execution budget, Booyoung Housing decided subcontract payments at amounts lower than the lowest bid price (total difference: 158.43 million KRW) through re-bidding or additional negotiations.

Booyoung Housing's actions violate Article 4 (Prohibition of Unfair Determination of Subcontract Payments), Paragraph 2, Item 7 of the Subcontracting Act, which stipulates that when subcontract contracts are concluded through competitive bidding, subcontract payments must not be determined at amounts lower than the lowest bid price without justifiable reasons. This constitutes a violation of Article 4, Paragraph 1 of the Subcontracting Act.

A Fair Trade Commission official stated, "This measure sanctions the act of determining subcontract payments at amounts lower than the lowest bid price through re-bidding or additional negotiations during the competitive bidding process, which is frequently used to select subcontractors," adding, "It is expected that unfair subcontracting trade practices, such as the principal contractor forcing subcontractors to accept unfairly reduced amounts, will improve."

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