Fair Trade Commission: "Incentives for Activating Linked Payment Contracts for Supply Prices"

[Asia Economy Reporter Song Seung-seop] The Fair Trade Commission (FTC) has decided to promote the ‘Supply Price Linked Contract’ and incentivize companies that use the ‘Standard Non-Disclosure Agreement (NDA)’ by evaluating them. Based on the evaluation results, outstanding companies are expected to be exempted from the FTC’s ex officio investigations or receive penalty point reductions under the Subcontracting Act.

On the 23rd, the FTC announced the revision and promulgation of the ‘Fair Trade Agreement Implementation Evaluation Criteria in the Subcontracting Sector’ to encourage the activation of supply price linked contracts and the use of the standard NDA. The Fair Trade Agreement is a system where large and medium-sized enterprises provide financial or technical support or apply conditions more favorable than laws and regulations to small and medium-sized enterprises they transact with. The FTC evaluates this and grants various incentives.

The revision includes a plan to award up to 5 bonus points for actively concluding and operating supply price linked contracts. A supply price linked contract is a manufacturing contract between a prime contractor and subcontractor that reflects fluctuations in raw material prices in the delivery unit price. As the global supply chain crisis worsened due to events such as the Ukraine war, voices calling for this system grew louder to address the difficulties faced by small and medium-sized enterprises. However, the FTC plans to review the evaluation criteria again to ensure the effectiveness of the evaluation if the supply price linked contract becomes a mandatory requirement under the Subcontracting Act.

The use of the standard NDA provided by the FTC will also be newly evaluated when companies receive technical data from suppliers. This measure aims to expand the use of the standard NDA prepared in February. According to the revised Subcontracting Act implemented at that time, the principal contractor is required to enter into a confidentiality agreement when receiving technical data.

When evaluating the ratio of cash payments, payments made through the win-win payment system will be rated higher than cases using promissory note substitute payment methods. The bonus points (3 points) for supporting partner companies’ industrial safety prevention activities, previously applied only to manufacturing and construction industries, have been expanded to all industries including information, communication, food, advertising, and internet sectors.

The FTC explained, “This revision is a measure to encourage voluntary participation of companies in key policies,” adding, “It will contribute to promoting mutual cooperation between large and small and medium-sized enterprises in the future.”

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