'Subcontracting Power Abuse' BNH Sanctioned by the Fair Trade Commission

by Jo Youjin

Published 10 Mar.2024 12:00(KST)

Imposition of Administrative Order and Fine of 1.773 Billion KRW

[Image source=Yonhap News]

BNH, which engaged in abusive practices such as imposing unfair special clauses on subcontractors, has been sanctioned by the Fair Trade Commission.

On the 10th, the Fair Trade Commission announced that it imposed corrective orders and a fine of 1.773 billion KRW on BNH for a total of eight violations of the Subcontracting Act, including setting unfair special clauses, unfair determination of subcontracting payments, and failure to issue written documents.

According to the Fair Trade Commission, from October 2019 to December 2020, BNH entrusted subcontractors with projects such as the "Medytox Osong Plant 3 Piping Work," "Icheon Hynix Piping Work," and "Cheongju Hynix Piping Work," but failed to issue subcontracting contracts before the start of construction or issued them with delays, and set special clauses that unfairly restricted the interests of subcontractors.

Additionally, without justifiable reasons, BNH did not provide payment guarantees for subcontracting fees to subcontractors within 30 days after the completion of construction, and despite increasing the contract amount by a total of 9.1 billion KRW over four occasions due to changes in construction costs, it did not notify the subcontractors.

Furthermore, violations such as forced purchase of goods, unjust cancellation of consignment, and demands for economic benefits were also detected. Accordingly, the Fair Trade Commission imposed corrective orders to prevent recurrence of unfair subcontracting transactions and levied fines.

The Fair Trade Commission evaluated, "This measure is significant in that it sanctions unfair subcontracting transaction practices against small subcontractors amid a construction market contraction caused by high inflation."