The Korea Fair Trade Commission said on the 30th it imposed a 103 million won penalty surcharge and a corrective order on Geonryong Construction for alleged violations of the Fair Transactions in Subcontracting Act.
According to a Korea Fair Trade Commission (FTC) probe, Geonryong Construction entrusted mechanical equipment work within the expansion project of the Yes Gumi Nursing Home to one subcontractor from March 8, 2024, to Dec. 15, 2024. However, the company did not pay the originally promised subcontract payment of 103 million won. The Korea Fair Trade Commission (FTC) therefore applied a suspected violation of Article 13(1) of the Fair Transactions in Subcontracting Act, which requires a prime contractor to pay the subcontract price within 60 days from the date it receives the subject matter from the subcontractor.
Geonryong Construction also failed to issue a written contract when additionally outsourcing work to the same company. Article 3(1) of the Fair Transactions in Subcontracting Act requires a prime contractor to issue to the subcontractor a document that includes the subcontract price and its payment method. Although Geonryong Construction received an advance payment from the client, it did not provide an advance payment to the subcontractor. Article 6(1) of the Fair Transactions in Subcontracting Act requires a prime contractor that receives an advance payment from the client to pay the subcontractor a certain percentage within 15 days.
In addition, Geonryong Construction did not issue a payment guarantee even though there were no grounds for exemption from a payment guarantee (such as a contract amount of 10 million won or less). Also, although the client approved a design change and increased the construction price, the company did not increase the price for the design change in the subcontracted work.
The Korea Fair Trade Commission (FTC) said, "We will continue to correct unfair transaction practices through strict sanctions on prime contractors' violations of the Fair Transactions in Subcontracting Act."