The Korea Fair Trade Commission said on the 18th it ordered corrective measures and imposed a 3.078 billion won penalty surcharge on five parcel delivery companies, including Coupang Logistics Service, for setting special terms unfavorable to subcontractors. The parcel companies contract out services such as delivery to freight carriers, and in the process demanded unfair special terms from the freight carriers, that is, the subcontractors.
In Aug. last year, following criticism that unfair subcontracting practices were causing heat-related illnesses and safety accidents among parcel delivery workers, the Korea Fair Trade Commission (FTC) conducted a full review of 9,186 subcontracting contracts by five parcel delivery companies. Those surveyed were Coupang Logistics Service, CJ Logistics, Lotte Global Logistics, Hanjin, and Logen. These companies' market share is 90.5%.
According to the Korea Fair Trade Commission (FTC), the five parcel delivery companies entered into special terms that shifted civil and criminal liability for safety accidents to subcontractors. They also agreed to special terms that ▲ do not return interest revenue generated during the cash collateral period ▲ require subcontractors to compensate for damages caused by labor disputes ▲ impose on subcontractors the expense of providing real estate as collateral, among others. The parcel companies reportedly received collateral of around 100 million won per subcontractor in the form of cash or real estate. In response, the FTC applied a violation of Article 3-4 of the Fair Transactions in Subcontracting Act, which prohibits setting unfair special terms.
A prime contractor must issue a written document stating the contents of the subcontract before the subcontractor performs the service. However, the five parcel companies failed to issue the contract document by the start date of service performance in 2,055 cases. In some cases, the document was issued only after 761 days had passed since the subcontractor performed the service contract.
The Korea Fair Trade Commission (FTC) said, "Large parcel delivery companies have revised or deleted unreasonable special terms that they had created as means to control and pressure subcontractors," adding, "We judge that the unreasonable practices experienced by parcel workers will improve and their workload will be eased."