KFTC Launches Investigation to Eradicate Unfair Practices in Subcontracting, Distribution, and Franchising Sectors

Subcontracting "Safety Management" Scope Expanded to Principal Contractors
Distribution and Agency Sectors Add New Items Including "Operating Margin"

Starting June 8, the Korea Fair Trade Commission will simultaneously conduct a large-scale written survey and inspection across three sectors: subcontracting, distribution·agency, and franchising. The purpose of this survey is to closely examine unfair trade practices in each market and establish a foundation for institutional improvements and ex officio investigations.

The subcontracting sector survey will be conducted until October 2, targeting 10,000 principal contractors and 90,000 subcontractors in the manufacturing, service, and construction industries. Notably, this year, the investigation into safety management responsibilities—previously focused solely on subcontractors—will be expanded to include principal contractors as well, allowing for a more precise assessment of management practices. In addition, the payment deadline ranges for subcontracting fees will be further subdivided, and to improve statistical accuracy, the method of reporting subcontracting transaction amounts will be changed to a "direct input system."

In the distribution and agency sectors, the survey will cover approximately 7,600 suppliers and in-store vendors, as well as 50,000 agencies. The key focus of this year’s survey is the addition of new items: "transaction concentration" and "operating margin." Through these, the commission plans to assess disparities in bargaining power and the actual degree of improvement in trade practices. In the distribution sector, special attention will be paid to unfair trade practices in the rapidly evolving online market, while in the agency sector, the "building materials" industry—which has recently seen active transactions due to redevelopment projects—will be newly added, bringing the total to 22 industries under examination.

In the franchise sector, the commission will review compliance with the "mandatory item disclosure requirement" among 100 major franchisors in the wholesale, retail, and service industries. The main focus will be whether the types of mandatory items that franchisees are required to purchase, as well as the supply price calculation methods, are clearly stated in the contracts, and whether the reasons for designation and determination criteria comply with established guidelines.

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