Fair Trade Commission Finalizes Consent Decree on Subcontracting Abuse by Yujin General Construction

The First in the Subcontracting Field

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The consent decree for Yujin General Construction, which was under investigation by the Fair Trade Commission for unfairly shifting costs to subcontracting companies, has been finalized.

The Fair Trade Commission announced on the 1st that it finalized the consent decree related to Yujin General Construction's unfair subcontracting transaction practices on the 15th of last month.

This consent decree includes measures to remedy damages caused to subcontractors due to Yujin General Construction’s subcontracting transactions related to the "landscaping planting and facility work during the construction of Samdo Viewnville W Apartments in the Sin-eum District of Gimcheon," such as ▲ failure to issue written documents and non-payment of subcontracting fees for additional work ▲ setting unfair special agreements including shifting construction waste disposal costs, and to prevent recurrence of similar damages.

Specifically, Yujin General Construction agreed to ▲ pay 815 million KRW for additional construction fees requested by subcontractors and civil damages arising from the fulfillment of special agreements ▲ pay all future subcontracting fees in cash ▲ and improve subcontracting contract terms related to defect repairs as part of corrective measures.

Yujin General Construction will implement these corrective measures for the next three years, and the Fair Trade Commission plans to appoint a compliance monitor to check the implementation status quarterly.

The Fair Trade Commission evaluated, "Considering that damages from additional work conducted without issuing written documents or unfair special agreements are difficult to confirm in amount and subcontractors must undergo civil procedures that require additional time and cost to receive payment, this consent decree sets a precedent where the original contractor voluntarily provides corrective measures that also compensate subcontractors for civil damages."

The consent decree system allows a business under investigation or review by the Fair Trade Commission to promptly conclude the case without confirming legal violations if it proposes reasonable corrective measures. In the subcontracting sector, the legal basis for consent decrees was established with the amendment of the Subcontracting Act in July 2022, and this is the first time the procedure has been initiated.