Proposal to Introduce a Bill Recommending 'Delivery Unit Price Linked Contracts'

Reflecting the Fair Trade Commission's Position and Willingness
Passage in the National Assembly Remains Uncertain

Yoon Chang-hyun, Member of the People Power Party. / Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Lee Ji-eun] Yoon Chang-hyun, a member of the People Power Party, is set to propose a bill on the "Supply Price Linkage System," which recommends the use of a standard subcontract price linkage contract to subcontracting business operators. The supply price linkage system is a key measure in the livelihood sector among the top 100 legislative tasks selected by the People Power Party. It is expected to become the final stance of the government and ruling party during the regular National Assembly discussions, reflecting the Fair Trade Commission's intention of "prior voluntary operation, followed by legislation."

The "Fair Transactions in Subcontracting Act Amendment" that Rep. Yoon is preparing to propose focuses on recommending the preparation of a standard subcontract payment linkage contract between ordering companies and subcontractors. Although both ruling and opposition parties are competitively proposing bills that include the supply price linkage system, since they specify mandatory preparation, which places a heavy burden on companies, the approach is to start with recommendations first. Additionally, to increase the utilization of the already implemented supply price adjustment consultation system and improve transaction practices, the competition authority will create and distribute a standard subcontract payment linkage contract that includes raw material items, price standards, and linkage methods, and recommend its use. The standard linkage contract is expected to be based on the subcontract payment linkage contract prepared last month by the Fair Trade Commission and the Korea Federation of SMEs.

On the 14th, Rep. Yoon said, "It is not easy to link prices unconditionally when there is no standard on how to reflect the increase in raw material prices. The order is to first induce voluntary compliance and see what is feasible."

Previously, related bills have been proposed by opposition members including Kang Min-guk of the same party. Rep. Kang included provisions to make the standard subcontract payment linkage contract mandatory, while Rep. Jin Sun-mi of the Democratic Party and Rep. Lee Seong-man of the same party stipulated that the raw material reference price be recorded in the contract document and that if the price fluctuates by more than 3%, the supply price should be uniformly adjusted. However, these bills have been criticized for potentially infringing on the freedom of private contracts.

This bill is expected to become a core part of the government and ruling party's stance during National Assembly discussions, as it reflects the Fair Trade Commission's somewhat lukewarm position on mandating the supply price linkage system. The Fair Trade Commission has maintained that, considering industrial and economic impacts, voluntary linkage using payment linkage contracts should be prioritized first, followed by legislation based on the results.

However, since the opposition insists on mandatory implementation, it is uncertain whether the bill will pass during the regular National Assembly session. The ruling and opposition parties also showed differing views on the supply price linkage system during the Special Committee on Livelihood Economy held on the 29th of last month.

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