Doosan Construction Fails to Fulfill Subcontract Payment Guarantee Obligation, Fair Trade Commission Issues Corrective Order

On the 11th, the Fair Trade Commission imposed 2 penalty points on Doosan Construction

The Fair Trade Commission has decided to impose penalty points and corrective orders on Doosan Construction for failing to fulfill the obligation to guarantee payment of subcontracting fees to subcontractors. However, it has decided not to impose a fine.

According to the Fair Trade Commission on the 11th, Doosan Construction entered into subcontracting contracts with 17 subcontractors for 22 defect repair works from April 3, 2020, to April 7, 2022, but did not guarantee payment of subcontracting fees within 30 days from the contract date. The payment guarantee for subcontracting fees is a system where the original contractor guarantees payment to subcontractors in case the original contractor fails to pay due to bankruptcy or other reasons. The Fair Trade Commission announced that it imposed 2 penalty points on Doosan Construction for failing to fulfill the payment guarantee obligation to subcontractors. If 5 penalty points accumulate within 3 years, the Fair Trade Commission can request the head of the relevant administrative agency to restrict bidding qualifications.

However, considering that the 22 cases without payment guarantees accounted for only a very small portion (0.3%) of the subcontracting contracts Doosan Construction signed during the period subject to ex officio investigation (January 1, 2020 ? June 30, 2022), and that payment guarantees were fulfilled for other construction commissions excluding defect repair works, the Fair Trade Commission decided not to impose a fine.

This measure is expected to contribute to preventing the risk that subcontractors do not receive subcontracting fees due to the original contractor’s deteriorating financial condition and to protecting the rights and interests of subcontractors. The Fair Trade Commission plans to continuously inspect and sanction unfair practices in the construction sector, where public concern is high due to poor construction, to establish a fair subcontracting transaction order.

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