SMEs Ministry Launches On-Site Inspections of Client Companies Over 'Price Linkage System' for Plastic Containers

On-Site Inspections of Seven Client Companies Begin May 7
Surveys to Be Conducted Simultaneously to Uncover Illegal Practices

The Ministry of SMEs and Startups has completed an official written investigation into the price linkage system for plastic container supply contracts and will begin on-site inspections of client companies starting on May 7.

A coffee shop located in a government office building in Seoul has a large pile of plastic cups inside the store.
Photo by Dongju Yoon doso7@

The price linkage system refers to a scheme in which changes in material costs are reflected in supply prices in advance according to pre-agreed terms when entering into subcontracting agreements. In the plastic processing industry, however, there are limitations in utilizing the system due to excessive supply or lack of product differentiation, which intensifies price competition.

Since April, the Ministry has launched a proactive official investigation into the price linkage system to check whether the increase in costs caused by the surge in international oil prices and synthetic resin raw material costs is being properly reflected in supply prices.

The on-site inspections will target a total of 15 client companies in three sectors with high demand for plastic containers: food manufacturing (such as instant rice and cooking oil), beverage manufacturing (such as carbonated drinks and bottled water), and coffee franchise businesses.

The written investigation found that, over the past year, these 15 companies have engaged in plastic container supply transactions worth a total of 320 billion won with 146 subcontractors.

Based on the results of the written investigation, the Ministry will conduct on-site inspections of seven companies, including: two suspected of legal violations, two with insincere document submissions, and three with a large number of ongoing subcontractor transactions. The Ministry plans to thoroughly check for unfair trade practices, such as the absence of linkage agreements or non-payment of supply prices.

To determine whether client companies have engaged in illegal practices by abusing their superior position, the Ministry also plans to conduct surveys of both the client companies subject to investigation and their subcontractors.

Through this process, the Ministry aims to identify all types of unfair trade practices in the plastic container manufacturing industry, including client companies forcing or inducing subcontractors to accept non-linkage agreements, unfair determination of supply prices, or non-payment of supply prices.

The Ministry of SMEs and Startups has stated that it will respond strictly to any unfair trade or illegal acts uncovered through this investigation, in accordance with the Win-Win Cooperation Act, by issuing improvement requests, corrective orders, and penalty points as appropriate.

Lee Euncheong, Director General for Win-Win Cooperation Policy at the Ministry, said, "Through thorough on-site inspections and surveys, we will strictly crack down on illegal acts such as contract splitting or coercion of non-linkage agreements to evade the price linkage system. We will continue to monitor and foster a business culture in which large and small companies share the burden of raw material costs together."

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