The Korea Fair Trade Commission imposed a 50 million won penalty surcharge and a corrective order on midsize auto parts maker NHV Korea for allegedly violating the Fair Transactions in Subcontracting Act.
According to the Korea Fair Trade Commission (FTC) on the 19th, NHV Korea commissioned 1,967 mold fabrication orders to 28 subcontractors over four years starting in May 2020. In the process, NHV Korea did not issue documents stating required items, including contract details, for 11 cases. For the remaining 1,956 cases, it issued documents that omitted legally required entries. Under the Fair Transactions in Subcontracting Act, a prime contractor like NHV Korea must issue contract-related documents before the subcontractor starts work.
Also, in 1,557 transactions with 24 subcontractors, NHV Korea did not issue receipts even though it had received the deliverables from the subcontractors. It was required to notify the subcontractors in writing of the inspection results within 10 days from the date of receipt of the deliverables, but it did not.
When signing 1,236 contracts with 21 subcontractors, NHV Korea barred subcontractors from raising objections to pass/fail determinations of deliverables. The Korea Fair Trade Commission (FTC) applied a suspected violation of Article 3-4, Paragraph 1 of the Fair Transactions in Subcontracting Act, which prohibits contract terms that unfairly infringe on the interests of subcontractors.
In addition, while paying subcontractors the remaining balances late, NHV Korea did not pay 115.87 million won in bills-alternative settlement method fees and 759.54 million won in late interest. However, after the Korea Fair Trade Commission (FTC) began its investigation, it reportedly paid both the bills-alternative settlement method fees and the late interest to the subcontractors.