FTC to Hold Briefing on Subcontract Settlement Disclosure and Energy-Linked Adjustment for 102 Large Business Groups

Aiming to Block False, Delayed, and Omitted Disclosures
Guidelines and FAQ to Be Distributed

The Fair Trade Commission will further strengthen its monitoring of the disclosure practices regarding subcontract payment settlement terms by large business groups. This move aims to block insincere disclosure activities such as false, delayed, or simply omitted disclosures—issues that have continued since the introduction of the system—and to ensure the practical implementation of the recently expanded scope of the subcontract payment adjustment system, now including energy costs.

On September 18, the Fair Trade Commission announced that it will hold a 'Briefing Session on Subcontract Payment Settlement Terms Disclosure System and Adjustment System' at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, on the 21st. The event will be attended by public disclosure managers from 3,538 companies affiliated with 102 designated large business groups. Ahead of the second half of 2026 disclosures, scheduled for early next year, the commission plans to assess the readiness of large companies in disclosing their payment settlement terms, and to take preventative action based on previous cases of violations.

The subcontract payment settlement terms disclosure system requires large companies to transparently disclose, semi-annually through the Financial Supervisory Service's electronic disclosure system (DART), information such as payment methods, payment periods, and the operation status of their internal dispute resolution mechanisms with small and medium-sized partner firms. Introduced in January 2023, the system was designed to promote voluntary improvement in payment practices and protect the rights and interests of lower-tier partners with weaker bargaining power by ensuring transparency in settlement information between large corporations and their primary partners.

However, even with the system now firmly in place, there continue to be frequent cases at industrial worksites of delayed disclosures past the statutory deadline, omission of key items, and misstatements of cash payment ratios.

In response, during this explanation session, the Fair Trade Commission will distribute a comprehensive set of practical guidelines and an FAQ document covering requirements for reportable subcontract transactions, detailed disclosure procedures, and other important considerations for companies. The commission intends to address ambiguities in transaction types and practical issues that have been repeatedly raised by companies, and will respond strictly to violations identified during inspections, especially in cases of intentional misconduct or gross negligence.

This session will also focus on the implementation guidelines for the subcontract payment adjustment system, whose scope was expanded last month. The Fair Trade Commission highlighted that, following amendments to the Subcontract Act in February, the adjustment system's applicable range has been broadened—from covering only key raw materials to now including 'major energy' such as gas and electricity as of August 11. The commission plans to closely examine whether these changes are being reflected in actual contracts and adjustment procedures on the ground.

The Fair Trade Commission stated, "We will continue to review the overall operation of the subcontract payment settlement terms disclosure system and the adjustment system to ensure stable implementation at worksites. We will also maintain support activities, such as holding briefing sessions and providing materials, to assist industry stakeholders."

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