Ministry of SMEs and Startups Conducts Regular Survey on Consignment and Delegation Transactions This Year... Targeting 15,000 Companies

[Asia Economy Reporter Junhyung Lee] The Ministry of SMEs and Startups announced on the 5th that it will conduct the "2021 Regular Survey on Consignment Transactions" starting from the 6th to rectify unfair trade practices occurring in the process of consignment and subcontracting transactions.

The survey targets 15,000 companies involved in consignment and subcontracting transactions. It will investigate unfair trade practices between companies in the first half of this year, such as non-payment of delivery fees and failure to issue agreements. The survey covers the obligations and compliance requirements of consignor companies as stipulated in Articles 21 to 25 of the Win-Win Cooperation Act. These include △issuance of agreements △payment of delivery fees △prohibition of unfair reduction of delivery fees △prohibition of unfair price determination △prohibition of unfair demands for technical data.

The regular survey on consignment and subcontracting transactions has been conducted annually since 1996 under Article 27 of the Act on the Promotion of Mutual Growth between Large Enterprises and SMEs. This year, the Ministry of SMEs and Startups will conduct the survey in three stages. In the first stage, it will investigate the transaction status, including payment details of delivery fees, targeting 3,000 consignor companies. In the second stage, a questionnaire survey on unfair trade practices in consignment and subcontracting transactions, such as whether agreements were issued, will be conducted targeting 12,000 subcontractor companies trading with the consignor companies under investigation. In the third stage, on-site inspections will be conducted on companies suspected of unfair trade practices based on the results of the first and second stages. However, companies that voluntarily improve during the investigation process will be excluded from on-site inspections.

Companies found to have engaged in unfair trade practices in consignment and subcontracting transactions through on-site inspections will be subject to improvement demands with 2 penalty points and educational orders. Companies that do not comply with improvement demands will be publicly disclosed with 3.1 penalty points. Additionally, if the Ministry of SMEs and Startups finds that the companies have violated the Fair Trade Act or the Subcontracting Act, it will request additional measures from the Fair Trade Commission.

The amended Win-Win Cooperation Act, which came into effect in April this year, now allows the Ministry of SMEs and Startups to issue corrective orders for unfair trade practices in consignment and subcontracting transactions that were not protected under the Subcontracting Act. Accordingly, the Ministry plans to provide on-site guidance to consignor companies regarding strengthened penalties for violations of the Win-Win Cooperation Act, including the introduction of corrective order systems.

The Ministry of SMEs and Startups will also check whether subcontractor companies pay delivery fees to lower-tier subcontractors in cash or through the Win-Win Payment system at a rate equal to or higher than the proportion of delivery fees they received via the Win-Win Payment system. This is to promote the expansion of the Win-Win Payment system, which has advantages such as preventing bill defaults and reducing financial costs. The survey will also check for unfair contract terms such as "no adjustment of delivery prices" included in agreements without justifiable reasons.

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