Fair Trade Commission: "Gwangmyeong Steel failed to pay subcontracting fees and unfairly lowered unit prices... Correction order and surcharge imposed"

Failure to Issue Written Documents While Outsourcing Manufacturing to Subcontractors
Nonpayment of Subcontracting Fees Amounting to 31 Million KRW
New Unit Prices Set Up to 30% Lower Than Previous Rates

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission announced on the 15th that it has decided to issue corrective orders (for recurrence prevention and payment) and impose a fine of 192 million KRW on Gwangmyeong Steel for failing to issue written documents and not paying subcontracting fees while outsourcing the manufacturing of construction washers to subcontractors, as well as for unfairly lowering unit prices.

According to the Fair Trade Commission, from October 2016 to September 2019, Gwangmyeong Steel outsourced the manufacturing of four types of construction washers to subcontractors without issuing written documents detailing the subcontracting fees and payment methods. Washers are thin, round metal plates placed under nuts when tightening bolts or nuts.

This act violates the Subcontracting Act, which requires the principal business operator to issue written documents containing legally mandated details to subcontractors in advance when outsourcing manufacturing or other tasks.

Additionally, Gwangmyeong Steel failed to pay 31.31 million KRW out of 116.94 million KRW in subcontracting fees for goods received from subcontractors between July and September 2019.

Gwangmyeong Steel also unfairly determined the subcontracting fees. Around May 2017, when setting new unit prices for the four washer items outsourced to subcontractors, Gwangmyeong Steel set the subcontracting fees at 12.5 to 21.5 KRW, which is 20.3% to 30.5% lower than the previously actual transaction prices.

A Fair Trade Commission official stated, "This action strictly penalizes unfair unit price reductions and nonpayment of fees that cause direct damage to subcontractors in continuous business relationships by exploiting the superior bargaining position of the principal business operator. The Fair Trade Commission will continue to make efforts to ensure subcontractors do not suffer unfair disadvantages through strict law enforcement against unfair subcontracting transactions."

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