Due to Soaring Raw Material Prices... Fair Trade Commission's Urgent Investigation into Unfair Price Cuts on Supply Contracts
[Asia Economy Sejong=Reporter Kwon Haeyoung] The Fair Trade Commission announced on the 6th that it will conduct an urgent one-month inspection on the actual conditions of delivery price adjustments between original contractors and subcontractors (suppliers).
This decision comes from the assessment that although raw material prices have surged due to COVID-19 and Russia's invasion of Ukraine, delivery price adjustments have not been smoothly carried out, exacerbating difficulties for subcontractors.
According to the Subcontracting Act, subcontractors are guaranteed the right to request delivery price adjustments when supply costs such as raw materials rise, and original contractors have the obligation to specify adjustment clauses in contracts and to initiate adjustment consultations.
The survey targets approximately 20,000 member companies belonging to small and medium enterprise cooperatives and the Korea Specialty Construction Association that produce and supply products using raw materials such as steel, non-ferrous metals, and petrochemicals, whose prices have recently surged. The survey will be conducted from today until July 6, with plans to extend if necessary.
The Fair Trade Commission plans to inspect the supply and demand status of major raw materials, whether delivery price adjustment requests were made, and the actual payment adjustment situations. It will also investigate whether the requirements and procedures for delivery price adjustments are reflected in subcontract contracts and whether subcontractors have received contracts containing such clauses from original contractors.
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Based on the analysis of the investigation results, the Fair Trade Commission will focus on educating and guiding industries with a high rate of failure to include delivery price adjustment clauses in contracts, and will recommend original contractors in industries with excellent contract inclusion and adjustment performance to be selected and announced as 'Outstanding Companies in Delivery Price Adjustment.'
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