The Korea Fair Trade Commission said on the 10th that it imposed a 378 million won penalty surcharge on Seo Jin Industry, a midsize auto parts manufacturer, for acts including violating the obligation to issue written documents in the course of subcontracting transactions.
According to the Korea Fair Trade Commission (FTC), Seo Jin Industry, while commissioning a total of 88 auto parts mold manufacturing jobs to 16 subcontractors from 2019 to 2023, delivered the written document containing the legally required contract details after work had begun. The Fair Transactions in Subcontracting Act requires the prime contractor to deliver the written document before the subcontractor starts work.
In addition, after receiving the commissioned goods, Seo Jin Industry paid the subcontract price more than 60 days late and was found not to have paid about 114 million won in late interest, bills discount fees, and fees for bill-substitute payment methods.
Along with this, Seo Jin Industry was also caught, in the process of entering subcontract contracts through a lowest-price competitive bidding method, deciding the subcontract price at an amount lower than the lowest bid without justifiable reason. The Korea Fair Trade Commission (FTC) pointed out that in a total of 50 contracts from 2019 to 2023, it conducted additional price negotiations, citing reasons such as improving revenue, and set amounts that fell below the lowest bid.
Seo Jin Industry applied to initiate a consent decision procedure before the Korea Fair Trade Commission (FTC) deliberation, but the Korea Fair Trade Commission (FTC), considering comprehensively the seriousness of the illegality, the clarity of the evidence, and whether the transaction had ended, did not accept it and decided on sanctions.
A Korea Fair Trade Commission (FTC) official said, "This is a case that strictly sanctioned the practice of a prime contractor using superior bargaining power to commence a transaction without written documentation or to decide the subcontract price at an amount lower than the lowest bid in competitive bidding," adding, "We will continue to respond to unfair subcontracting transactions that infringe on subcontractors' rights and interests."