FedCok "Cautious Approach Needed for Legislative Push on Mandatory Supply Price Linkage System"

Policy Debate on the Delivery Price Linkage System

[Asia Economy Reporter Park Sun-mi] There are concerns that the mandatory legalization of the Delivery Price Linkage System could cause economic and legal problems, and especially in the current era of high inflation, it could lead to greater side effects, so caution is needed in promoting the system.

On the 10th, the Federation of Korean Industries (FKI) held a "Delivery Price Linkage System Policy Forum" at the FKI Hall to review the economic and legal issues of the recently discussed legalization of the Delivery Price Linkage System. In his opening remarks, Kwon Tae-shin, Vice Chairman of the FKI, expressed concerns, stating, "The Delivery Price Linkage System directly regulates prices, which are the core of the market economy, potentially causing consumer harm, further weakening the competitiveness of domestic small and medium-sized enterprises, and it is questionable whether a system design that can properly function in the industrial field is possible."

He continued, "To minimize the side effects of the Delivery Price Linkage System on the industry, rather than artificial and mandatory legalization, incentives should be provided to companies implementing the system to autonomously expand delivery price linkage contracts," he emphasized.

Professor Jo In-sook (Yonsei University) argued in her keynote presentation, "Theoretically, the Delivery Price Linkage System can cause moral hazard due to information asymmetry and weaken corporate competitiveness by reducing profits due to rising costs." Companies facing increased costs due to the introduction of the Delivery Price Linkage System have no choice but to raise the prices of final products, which leads to decreased product demand and reduced corporate profits, ultimately weakening corporate competitiveness.

Professor Jo also stated, "For the Delivery Price Linkage System to function properly in the industrial field, it is important for large corporations and SMEs to form long-term contractual relationships based on trust," adding, "Policies related to the linkage system should be designed after analyzing the impact of the pilot projects voluntarily implemented by some companies on the industrial field to minimize side effects."

In the comprehensive discussion, Professor Kim Byung-tae of Youngsan University pointed out, "Legalizing and mandating the Delivery Price Linkage System violates general principles of contracts such as the equal legal status of contracting parties guaranteed by relevant laws and the principle of freedom of contract under civil law," and argued, "It also violates constitutional general principles such as private autonomy and economic freedom, prohibition of excess, prohibition of infringement on the essential content of fundamental rights, and prohibition of discrimination, posing serious legal issues."

He further emphasized, "Autonomous problem-solving between contracting parties should be prioritized, and it is most desirable to induce the principal and subcontractor parties to voluntarily enter into delivery price linkage contracts," adding, "To this end, the development of policies that can encourage voluntary participation through incentives is urgently needed."

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