The Korea Fair Trade Commission is pushing to introduce a system that would allow small and midsize enterprises and microbusinesses to conduct collective bargaining against large companies. The aim is to ensure that small and midsize enterprises and microbusinesses that supply to the same large company are not punished as collusion even if they agree on prices. In addition, the plan would allow joint refusals to supply. If this actually happens, some worry that Samsung Electronics and SK hynix could face difficulties securing "supply of materials, parts and equipment" in time.
◇ Korea Fair Trade Commission (FTC) pushes to allow SMEs and microbusinesses to "agree on supply prices" and "jointly refuse to supply"
The Korea Fair Trade Commission (FTC) reported on June 30 at a Cabinet meeting a "plan to overhaul the system to strengthen the bargaining power of parties in the weaker position." The contents are largely twofold. It includes a plan that would allow small and midsize enterprises and microbusinesses supplying to large companies to agree among themselves on transaction terms such as unit prices, and not apply collusion rules to this. Along with this, a plan was also presented to allow collective actions such as joint refusals to supply. The aim is to give small and midsize enterprises and microbusinesses in the weaker position bargaining power to respond to large companies' abuses.
When releasing this plan, the Korea Fair Trade Commission (FTC) cited Australia's "class exemption" as an overseas example. Since 2021, Australia has allowed small businesses with prior-year sales of 10 million Australian dollars (about 10 billion won), franchisees, and fuel retailers to agree on transaction terms. However, it did not allow collective actions such as joint refusals to supply. The class exemption is not operated indefinitely but applied temporarily until 2030. In 2029, the authorities will assess the effectiveness of the system and decide whether to extend it.
In addition, in the United States, farmers' cooperatives are allowed to adjust production volumes or jointly negotiate prices with big-box retailers. The European Union (EU) allows collective bargaining only when platform workers and the self-employed are in a "worker-like status." France allows suppliers to set agri-food distribution prices.
◇ Concerns rise: "Will Samsung and SK face difficulties securing materials, parts and equipment?"
Regarding the Korea Fair Trade Commission (FTC)'s "plan to overhaul the system to strengthen the bargaining power of parties in the weaker position," concerns are being raised that "Samsung Electronics and SK hynix could face difficulties securing 'materials, parts and equipment.'"
If the plan released by the Korea Fair Trade Commission (FTC) is realized, many partner companies that have transactions with Samsung Electronics, SK hynix, Hyundai Motor, and LG Electronics are expected to gain the authority to conduct collective bargaining and actions. The FTC's plan is to allow collective bargaining if the combined annual sales of partner companies are smaller than those of the negotiating counterparty (a large company), and if the partner companies' sales dependence on that counterparty is 30% or more.
However, the Korea Fair Trade Commission (FTC) says it will minimize side effects by imposing measures such as "temporary suspension orders" on collective actions that appear likely to cause significant consumer harm. Still, critics note it could take considerable time for the FTC to receive a complaint and make a determination, and the criteria for judgment are not clear. In particular, there are concerns that in the early stages of implementation, without precedents, temporary suspension orders may not be issued and refusals to supply could be prolonged. In capital-intensive industries such as semiconductors and automobiles, if materials, parts, and equipment are not supplied on time and production lines stop even for a day, losses worth trillions of won can occur.