Fair Trade Commission imposes heavy fine on Hongseong Construction for subcontracting power abuse

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Lee Jun-hyung] Hongseong Construction has been sanctioned by the Fair Trade Commission for 'gapjil'?abusing power?by selecting subcontractors through the lowest bid and then further reducing the contract amount.

On the 31st, the Fair Trade Commission announced that it decided to issue a corrective order and impose a fine of 27 million KRW on Hongseong Construction for determining subcontract payments at amounts lower than the lowest bid price after selecting suppliers through competitive bidding.

Previously, in November 2020, Hongseong Construction selected subcontractors for some earthworks and pipeline works through a lowest-price designated competitive bidding process. At that time, supplier A submitted a bid of 2,435.7 million KRW, winning as the lowest bidder. However, Hongseong Construction decided the subcontract payment at 2.4 billion KRW, lower than the lowest bid amount, citing simple calculation convenience, and then signed the subcontract agreement.

The Fair Trade Commission views this as a violation of the "Act on the Fairness of Subcontract Transactions." Hongseong Construction concluded the subcontract contract through competitive bidding but determined the subcontract payment at an amount lower than the lowest bid price without justifiable reasons.

Meanwhile, this case is the first small fine imposition case to apply the Fair Trade Commission's simplified resolution procedure. Previously, small fine cases, even with clear violations and small fine amounts, had to undergo formal oral hearings regardless of the business operator's acceptance, making swift processing difficult. Therefore, on December 30 last year, the Fair Trade Commission introduced a simplified procedure allowing rapid resolution of small fine cases depending on the business operator's acceptance.

A Fair Trade Commission official said, "We expect businesses to actively utilize the simplified procedure for small fine cases, which can reduce unnecessary burdens, following this simplified resolution. We will also strictly sanction unfair subcontracting practices."

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