On the 1st, the Ministry of SMEs and Startups announced that it would request the Fair Trade Commission to file a complaint against Hyundai Kefico for violating the Subcontracting Act and KYOCHON F&B for violating the Fair Trade Act during the 30th Mandatory Reporting Request Deliberation Committee.
The two corporations being reported this time have continually delayed or inadequately issued written documents to subcontractors with whom they have maintained long-term subcontracting relationships, or have unilaterally reduced the distribution margin of partner companies by exploiting their transactional status, causing significant damage.
From May 2020 to May 2023, Hyundai Kefico entrusted the manufacturing of molds for automotive parts to 18 subcontractors and issued written documents containing essential details about 98 contracts with 13 subcontractors up to 960 days after the start date of the work. Among the delayed issuance cases, 86 cases and 12 other cases were issued with documents missing delivery dates, and during the same period, it delayed payments for subcontracting fees to 16 subcontractors beyond the legal deadline of 60 days from the receipt date of the goods, without paying the delay interest amounting to approximately 247.9 million won.
In response, the Fair Trade Commission imposed a penalty surcharge of 54 million won and a corrective order on Hyundai Kefico last October regarding its violations. The Ministry of SMEs and Startups explained that it decided to request this complaint after considering that Hyundai Kefico has continuously delayed and inadequately issued written documents and that the impact on the transaction culture in the automotive parts market is significant.
KYOCHON F&B, the headquarters managing the franchise business for 'KYOCHON Chicken,' contracted with a distributor that supplies exclusive cooking oil to its franchise stores. KYOCHON F&B unilaterally reduced the supply margin of the exclusive oil, priced at 1,350 won per can, to 0 won, receiving a corrective order and a penalty surcharge of 283 million won from the Fair Trade Commission last October.
Considering that KYOCHON F&B, which has over 1,300 franchise stores nationwide and is a representative chicken franchise headquarters in Korea, has abused its transactional status to provide disadvantages to small enterprises, the Ministry of SMEs and Startups determined that severe sanctions are necessary to eradicate such actions for the protection of small enterprises and social trust and decided to request a complaint.
Choi Won-kyung, director of the Small Business Policy Office at the Ministry of SMEs and Startups, noted that 'the mandatory reporting request system is designed to protect small enterprises from unfair transactions by businesses with superior transactional status' and added, 'The decision to request complaints for these two violations has significance in preventing disproportional disadvantages to subcontractors due to the chronic transaction culture in the automotive parts manufacturing market and in protecting small enterprises from franchises with superior status.' He further stated, 'We plan to take serious measures against chronic unfair practices that harm small enterprises or violate the law by abusing superior positions.'