The Korea Fair Trade Commission is investigating Samsung Electronics on suspicion of violating the Fair Transactions in Subcontracting Act, sources said on the 4th.
According to the industry and others on the day, A, a subcontractor of Samsung Electronics, recently reported to the Korea Fair Trade Commission (FTC) that it suffered damages because Samsung Electronics unfairly reduced the entrusted volume. In response, the Korea Fair Trade Commission (FTC) launched an investigation to determine the facts.
A is a first-tier supplier of cables used in U.S. 5G telecom equipment and had a subcontract with Samsung Electronics. A claims that Samsung Electronics reduced its orders midway, saying Verizon Communications Inc. changed the type of cable used for its 5G equipment. A's U.S. subsidiary later faced management difficulties and went bankrupt. A also claimed that, after Samsung Electronics pointed out that the delivery lead time was too long, it moved its factory from California to Texas, where a Samsung Electronics subsidiary's logistics warehouse is located.
The Korea Fair Trade Commission (FTC) is expected to verify the facts through the investigation and determine whether Samsung Electronics' conduct constitutes a violation of the Fair Transactions in Subcontracting Act. The Fair Transactions in Subcontracting Act prohibits a prime contractor such as Samsung Electronics from arbitrarily canceling or changing an entrustment when there is no reason to shift responsibility to the subcontractor.
In response, Samsung Electronics said, "In conducting transactions with A, we have never demanded facility investment nor forced a factory transfer," adding, "We have made every effort to comply with the law and to pursue mutual growth with partner companies, and there has been no violation of the law at all."