Plastic Container Supply Price Indexation System Probe Uncovers Violations at Four Companies

Administrative Measures Imposed:
Requests for Improvement, Penalty Points, Fines, and Education Orders

Amid soaring international oil and feedstock prices for plastics such as naphtha and ethylene triggered by the Middle East war, the cost burden on small and medium-sized plastic container manufacturers has intensified. In this context, four companies have been caught violating the "Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small and Medium Enterprises."

On September 9, the Ministry of SMEs and Startups announced the results of its "ex officio investigation into the supply price indexation system for transactions involving plastic containers," which was conducted to address the difficulties faced by small and medium-sized subcontractors due to recent fluctuations in raw material prices.

The ministry launched the investigation in April to check whether the supply price indexation system is operating as intended in practice. For this purpose, a total of 15 ordering companies from three industries with high demand for plastic containers—food manufacturing, beverage manufacturing, and coffee franchise sectors—were selected for the survey. Based on a written survey, the ministry targeted seven companies, including those suspected of legal violations, those who were uncooperative in submitting documents, and those with a large number of subcontractors, for an in-depth on-site investigation and a survey of subcontractors.

As a result of the investigation, four violators were identified: two companies in the food manufacturing sector and two coffee franchise companies. The specific violations detected included five delayed issuance cases of contract documents, six delayed issuance cases of index-linked contract documents, and twelve cases where index-linked contracts were not issued, totaling twenty-three violations.

For these four violators, the ministry imposed administrative measures under the cooperative partnership law, taking into account the severity of each infraction. These measures included “requests for improvement,” “imposition of 2 penalty points,” “imposition of fines (up to 10 million won),” and “education orders.”

Lee Euncheong, Director General for Win-Win Policy at the Ministry of SMEs and Startups, stated, “Forcing small and medium-sized subcontractors to unilaterally bear the burden caused by surging global raw material prices is inconsistent with the principles of a fair market economy.” He added, “We will continue to monitor implementation of the supply price indexation system so that a culture of shared burden for raw material costs between large and small companies can take root in business transactions.”

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