Fair Trade Commission Imposes Heavy Fines on Sinsung ENG and Sinustech for Subcontracting Power Abuse

[Asia Economy Sejong=Reporter Dongwoo Lee] The Fair Trade Commission announced on the 23rd that it has decided to issue corrective orders and impose fines on Sinseong ENG and Synerustech for engaging in unfair subcontracting transactions.

According to the Fair Trade Commission, from August 2015 to December 2018, Sinseong ENG and others entrusted subcontractors (receiving businesses) with manufacturing parts related to semiconductor process automation equipment via email. The subcontractors then re-entrusted the manufacturing to other manufacturers and ultimately delivered the products to Sinseong ENG and others.

During this process, Sinseong ENG and others were found to have unjustly returned entrusted goods worth approximately 3.98 million KRW to the subcontractors 578 days after receipt, citing reasons of excess delivery.

Despite receiving the entrusted goods from the subcontractors, they did not pay the subcontracting fees amounting to 48.06 million KRW, and delayed payment beyond 60 days from the receipt date, failing to pay delay interest of 42.56 million KRW for the overdue period.

They also issued promissory notes for the subcontracting fees, but did not pay discount fees of 12.84 million KRW for the period exceeding 60 days from the receipt date of the goods. Additionally, written subcontracting contracts were issued after receiving the entrusted goods from the subcontractors or were issued without signatures or seals from both parties.

Accordingly, the Fair Trade Commission ordered both companies to prevent recurrence in the future and imposed a fine of 20 million KRW on Synerustech, which is currently operating in the automation equipment business sector, to enhance the effectiveness of corrective measures.

A Fair Trade Commission official stated, "This action is significant in that it imposes subcontracting law compliance obligations on the original business operator even when the subcontractor does not manufacture directly but re-entrusts manufacturing to a third party." He added, "We plan to continuously monitor to ensure that subcontractors are not unfairly disadvantaged in atypical subcontracting relationships."

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