Daekwang Tech Caught Unjustifiably Reducing Subcontract Payments; KFTC Issues Corrective Order

Unjustified Deduction of About 23 Million Won

Corrective Order Issued to Prevent Recurrence of Similar Conduct

Daekwang Tech, which had subcontracted the manufacture of molds and then unjustifiably reduced the payment to its subcontractor, has been sanctioned by the Korea Fair Trade Commission (KFTC).

The KFTC announced on April 9 that it has decided to impose a corrective order (order to prevent recurrence) for Daekwang Tech's violation of the Subcontracting Act.

Daekwang Tech, which primarily produces molds for automotive parts, subcontracted the manufacturing of DP plastic tower dryers to a supplier on May 3, 2023. Despite receiving the final delivery in July of the same year, the company unjustifiably deducted 23.39 million won from the subcontract payment. This action violates Article 11, Paragraph 1 of the Subcontracting Act, which stipulates that subcontract payments may only be reduced if a valid reason is provided.

Accordingly, the KFTC imposed a corrective order to prevent the recurrence of the same or similar conduct in the future. This measure is significant in reaffirming that subcontract payments agreed upon at the time of commissioning can only be reduced if there is a legitimate reason.

The KFTC stated, "We will continue to closely monitor unfair practices that infringe upon the legitimate rights and interests of subcontractors in subcontracting transactions and will take strict action against any violations of the law that are detected."

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