A Fine of 350 Million KRW Imposed on Interplex for Cutting Off Transactions After Delivery Guarantee

Apple Halts Transactions After Order Cancellation

[Asia Economy Reporter Moon Chaeseok] Interflex, which guaranteed subcontractors two years of supply and entrusted them with producing iPhone parts before unilaterally cutting off transactions, was caught by the Fair Trade Commission.

On the 11th, the Fair Trade Commission announced that it decided to impose a corrective order and a fine of 350 million won on Interflex for violating the Subcontracting Act through unfair cancellation of consignment.

According to the Fair Trade Commission, Interflex agreed with Apple in January 2017 to supply printed circuit boards for the iPhone X and entrusted company A with part of the manufacturing process, specifically the copper plating process.

Interflex guaranteed delivery of a certain quantity for two years in the contract with company A, set the unit price accordingly, and then started production.

However, one year after the contract, when Apple, the ordering party, stopped placing orders, Interflex unilaterally cut off transactions with company A without notifying them.

Only about 20 to 32% of the guaranteed quantity had been delivered.

Despite this, Interflex not only failed to negotiate compensation for the losses incurred by company A but also continued to charge company A monthly for rental management fees for equipment in the factory after the transaction was stopped.

The Fair Trade Commission judged that since the order suspension by Apple, the ordering party, was not a reason to blame company A, Interflex’s unilateral termination of transactions with company A violated Article 8 of the Subcontracting Act.

Shim Joo-eun, head of the Manufacturing Subcontracting Division at the Seoul Regional Fair Trade Office, said, "This action penalizes the principal business operator who guaranteed the quantity in writing to the subcontractor and even required equipment installation, but canceled the fair consignment without any fault of the subcontractor, causing huge damage," adding, "We will continue to strictly enforce the law to ensure subcontractors are not unfairly disadvantaged."