Fair Trade Commission at the Government Complex in Sejong City. 2023.10.13[Photo by Yoo Dae-gil, dbeorlf123@ajunews.com]
The Fair Trade Commission (FTC) has initiated an agreement procedure regarding a cooperation plan worth 11.3 billion won ($8.5 million) from Samsung Heavy Industries, which is under investigation for alleged violations of subcontracting laws.
According to relevant authorities on June 10, the FTC is looking into Samsung Heavy Industries' practice of issuing contracts late after subcontractors began work on ship processing tasks necessary for loading hull structures.
Samsung Heavy Industries has been entering into basic subcontracting agreements with subcontractors based in its shipyard on an annual basis. During the contract period, Samsung provides the subcontractors with work drawings and necessary facilities and materials, while the subcontractors carry out the work when feasible.
The issue arose from delays in issuing written contracts during individual contract transactions. Article 3 of the subcontracting law stipulates that the primary contractor must provide the subcontracting agreement without delay after agreeing on key contract terms before work begins.
In response, Samsung Heavy Industries opted to improve its business relationships with subcontractors rather than contest the legal judgment. In December of last year, the company applied to the FTC to initiate the agreement procedure. This procedure allows a business accused of legal violations to propose corrective measures, which the FTC can accept to conclude the case.
Samsung Heavy Industries proposed a cooperation plan totaling 11.3 billion won, which includes an increase of about 3 billion won in support funds and the establishment of new holiday return and vacation allowances worth approximately 5.3 billion won. The plan also includes improvements to contract management systems, the full use of standard subcontracting agreements, and training for employees and partners to enhance business order.
The FTC has determined that Samsung Heavy Industries' corrective measures meet the requirements to initiate the agreement procedure.
Following the initiation of the FTC's procedure, if the agreement is finalized after a consultation process, no penalties such as fines will be imposed. This marks the second time an agreement procedure has been initiated regarding Article 3 of the subcontracting law since May of last year, when five entertainment companies, including Hive and SM, agreed to implement standard contracts and establish a cooperation fund of 1 billion won.
An FTC official stated, "We will work quickly with Samsung Heavy Industries to specify the corrective measures and prepare a provisional agreement plan. We plan to present the final plan to the committee after gathering feedback from stakeholders and consulting with relevant agencies."
According to relevant authorities on June 10, the FTC is looking into Samsung Heavy Industries' practice of issuing contracts late after subcontractors began work on ship processing tasks necessary for loading hull structures.
Samsung Heavy Industries has been entering into basic subcontracting agreements with subcontractors based in its shipyard on an annual basis. During the contract period, Samsung provides the subcontractors with work drawings and necessary facilities and materials, while the subcontractors carry out the work when feasible.
The issue arose from delays in issuing written contracts during individual contract transactions. Article 3 of the subcontracting law stipulates that the primary contractor must provide the subcontracting agreement without delay after agreeing on key contract terms before work begins.
In response, Samsung Heavy Industries opted to improve its business relationships with subcontractors rather than contest the legal judgment. In December of last year, the company applied to the FTC to initiate the agreement procedure. This procedure allows a business accused of legal violations to propose corrective measures, which the FTC can accept to conclude the case.
Samsung Heavy Industries proposed a cooperation plan totaling 11.3 billion won, which includes an increase of about 3 billion won in support funds and the establishment of new holiday return and vacation allowances worth approximately 5.3 billion won. The plan also includes improvements to contract management systems, the full use of standard subcontracting agreements, and training for employees and partners to enhance business order.
The FTC has determined that Samsung Heavy Industries' corrective measures meet the requirements to initiate the agreement procedure.
Following the initiation of the FTC's procedure, if the agreement is finalized after a consultation process, no penalties such as fines will be imposed. This marks the second time an agreement procedure has been initiated regarding Article 3 of the subcontracting law since May of last year, when five entertainment companies, including Hive and SM, agreed to implement standard contracts and establish a cooperation fund of 1 billion won.
An FTC official stated, "We will work quickly with Samsung Heavy Industries to specify the corrective measures and prepare a provisional agreement plan. We plan to present the final plan to the committee after gathering feedback from stakeholders and consulting with relevant agencies."
* This article has been translated by AI.
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