Fair Trade Commission Imposes 170 Million KRW Fine on Koas for Underpaying Subcontracting Fees

[Sejong=Asia Economy Reporter Kwon Haeyoung] The Fair Trade Commission announced on the 13th that it will impose a corrective order and a fine of 167 million won on office furniture company Koas for unfairly reducing subcontract payments.

According to the Fair Trade Commission, Koas unjustly reduced payments 20 times from September 2015 to July 2018 against one subcontractor.

This company, which manufactures office furniture, requested reductions on subcontract payments every month under the pretext of "ordering goods in large quantities." The total amount reduced reached 185 million won.

The Subcontracting Act allows the principal business operator to reduce payments only when a legitimate reason is proven. The Fair Trade Commission stated that simply adjusting previously agreed payments due to increased volume is difficult to justify.

The investigation revealed that the company issued purchase orders excluding unit prices for some items when outsourcing the manufacturing of chair and drawer parts. Even when unit prices changed, they did not issue contracts reflecting those changes.

Additionally, they violated the "inspection notification obligation," which requires notifying the inspection results of goods in writing within 10 days of delivery.

Accordingly, the Fair Trade Commission issued a corrective order to prevent recurrence and ordered the payment of the reduced subcontract payments and delayed interest.