From Abundance Comes Generosity... Samsung Heavy Industries Unveils 11.3 Billion Won Mutual Growth Package for Partners

Applied for 'Consent Resolution' Over Delayed Issuance of Contracts
Proposes Mutual Growth Measures Worth 11.3 Billion Won, Including Increased Incentive Payments

Samsung Heavy Industries has proposed a large-scale mutual growth plan worth 11.3 billion won in relation to allegations of delayed issuance of subcontract agreements, and will actively work with the Korea Fair Trade Commission to improve fair trading practices.

Samsung Heavy Industries has prepared a voluntary corrective plan worth 11.3 billion won in relation to allegations of violating the Subcontracting Act. The photo shows an FSRU built by Samsung Heavy Industries. Samsung Heavy Industries. Photo by Yonhap News.

On June 10, the Fair Trade Commission (FTC) announced that it has decided to initiate the consent resolution process for Samsung Heavy Industries, which is under suspicion of violating Article 3 of the Subcontracting Act (issuance and retention of written documents). The consent resolution system allows a company accused of legal violations to voluntarily prepare remedies for damages and measures to improve trading practices. If the FTC deems the proposal appropriate, the case can be closed swiftly without determining whether a violation actually occurred. This is the second time in history that a consent resolution has been initiated for delayed issuance of written documents under the Subcontracting Act, following the case of five entertainment companies in June last year.

Samsung Heavy Industries had been investigated by the FTC for issuing contracts to in-house partner companies (subcontractors) only after work had already commenced during the subcontracted ship processing process, thus engaging in delayed issuance of written agreements. In December of last year, Samsung Heavy Industries applied for the consent resolution process, aiming to improve trading relationships and promote mutual growth, rather than engage in prolonged legal disputes with subcontractors.

The corrective and mutual growth measures proposed by Samsung Heavy Industries total 11.3 billion won, the largest among this year’s consent resolution applications in terms of amount. Specifically, these measures include an annual increase of 3.05 billion won in incentive payments, the introduction of new holiday travel and vacation allowances totaling 5.25 billion won per year, a 2 billion won contribution to the Skilled Technician Hope Mutual Aid Project, and a 1 billion won increase to the Joint Labor Welfare Fund. In addition to direct financial support, the company plans to fundamentally resolve the issue of delayed issuance by overhauling its contract management system, mandating the use of standard subcontract agreements, and establishing a permanent consultative body between contractors and subcontractors as structural countermeasures.

Given that fines for delayed issuance of written agreements are typically between 40 million and 200 million won, Samsung Heavy Industries’ voluntary corrective plan represents a far more substantial remedy for damages than standard penalties. It is believed that the company’s strong financial performance, including returning to the 10 trillion won sales club after nine years and recording its highest operating profit in 12 years (862.2 billion won) last year, positively influenced this mutual growth decision.

Meanwhile, the FTC judged that this measure would actively improve the subcontracting trade order and protect subcontractors, and thus commenced the consent resolution process. Going forward, the FTC plans to draft a provisional consent resolution by further detailing the corrective measures through consultations with Samsung Heavy Industries, and will finalize the plan after gathering opinions from stakeholders and related agencies.

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