It has been revealed that the advertising agency DDB Korea demanded a large sum of money from subcontractors on the condition of signing a subcontracting agreement, and was sanctioned by the Fair Trade Commission.
On 1st, the Fair Trade Commission imposed a penalty surcharge of 576 million won along with a corrective order for DDB Korea's conduct of "unjust demand for economic benefits" and indicated it would file a complaint against DDB Korea and its CEO with the prosecution.
According to the Fair Trade Commission, DDB Korea suggested a transaction worth 8 billion won to Company A, which was attempting to outsource game-related advertising and content production services, demanding a total of 5.28121 billion won as a preliminary condition. This amount included 4.28121 billion won payable to five existing clients and a request for a bid deposit of 1 billion won from Company A.
Company A accepted this demand and, between May and June 2023, transferred 4.28121 billion won to five designated subcontractors by DDB Korea and 1 billion won to DDB Korea's headquarters. However, the subcontracting agreement was not signed until after all payments were completed.
Subsequently, DDB Korea signed the main contract (June 27) and the detailed contract (July 5) with Company A, agreeing to pay a total of 6.248 billion won by July 14, but the actual subcontract payment was never made. Promises to return money to Company A multiple times were ultimately not fulfilled.
The Fair Trade Commission determined that DDB Korea had neither the intent nor the ability to pay subcontracting fees from the beginning. The act of demanding money as a transaction condition falls under the "Act on the Fairness of Subcontracting Transactions", Article 12-2, which prohibits unjust demands for economic benefits. In particular, it pointed out that this demand involved transferring existing debts to Company A for five subcontractors and included demands for nonexistent bid deposits, indicating significant illegality.
Moreover, despite having received only 834 million won in service fees from the client Company C, DDB Korea appeared to have demanded more than 5.2 billion won from Company A.
A Fair Trade Commission official noted, "This action penalizes the main contractor for unjustly demanding money from a subcontractor at a transactional disadvantage without legitimate reasons on the condition of a large-scale transaction," adding, "We will strive to protect subcontractors from unfair disadvantages and establish a fair subcontracting transaction order."