Inzi Controls Caught for Unfair Practices: Forcing Subcontractors to Work Without Contracts and Withholding Delayed Interest

Failure to Issue Contracts and Omission of Essential Terms in Written Agreements
Entrenched Practice of Withholding Payments Until Mass Production Inspection Completion

Inzi Controls, an automotive parts manufacturer, has been found to have repeatedly engaged in unfair trade practices, such as failing to properly issue subcontracting contracts and not paying delayed interest on payments. As a result, the Korea Fair Trade Commission has issued a corrective order and imposed a fine exceeding 100 million won.

Headquarters of Inzi Controls located in Siheung, Gyeonggi-do. Inzi Controls official website.

The Fair Trade Commission announced on the 10th that it had determined Inzi Controls violated the Subcontracting Act while outsourcing automotive parts mold manufacturing to 16 subcontractors from June 2020 to May 2023. The commission decided to impose corrective measures and a fine of 144 million won.

Inzi Controls outsourced 120 mold manufacturing projects. For 45 of these, the company did not issue any subcontracting contracts, and for 75 cases, the documents issued lacked essential information such as the requirements for subcontract payment adjustments. In some cases, it was found that the company habitually violated its obligation to issue documents, such as providing written contracts up to 328 days after the subcontractor had already started work.

There were also findings of unfair special contract clauses and breaches of obligation that unjustly restricted the rights of subcontractors. Inzi Controls included unfair clauses in contracts, such as prohibiting subcontractors from objecting to inspection results or requiring them to follow Inzi Controls' instructions if no agreement was reached on a contract amendment. Additionally, for 10 subcontractors, the company failed to fulfill its obligation to notify inspection results in writing within the legal deadline of 10 days.

There were further violations during the payment process. Inzi Controls paid subcontracting fees to 15 subcontractors after the statutory payment deadline of 60 days, but did not pay the delayed interest of 68.41 million won for the overdue period. Furthermore, fees totaling 10.31 million won incurred while using promissory note substitute payment methods also remained unpaid. However, it was confirmed that all of these unpaid amounts were settled in full during the Fair Trade Commission's review process.

This action is significant as it sanctions the common industry practices of verbal agreements and delayed payments in the mold manufacturing sector, raising awareness among principal contractors. The Fair Trade Commission stated, "We expect this measure to serve as an opportunity to correct the wrongful practice of withholding payments until inspection by the mass production facility, even for parties not directly involved in the subcontracting contract," and added, "We will continue to closely monitor unfair trade practices in the mold manufacturing sector—a key national foundational industry—and take strict action whenever violations are identified."

This content was produced with the assistance of AI translation services.