Ministry of SMEs and Startups Requests Prosecution to File Charges Against Samsung Heavy Industries and Jeil Feed at the Fair Trade Commission

Samsung Heavy Industries Delays Issuance of Documents for Years
Jeil Feed Unfairly Passes Overdue Interest to Dealers

The Ministry of SMEs and Startups requested the Fair Trade Commission to file a criminal complaint against Samsung Heavy Industries and Jeil Feed for violating the Subcontracting Act and the Fair Trade Act.

Shuttle tanker built by Samsung Heavy Industries
[Photo by Yonhap News]

The Ministry of SMEs and Startups announced on the 31st that it made this decision at the ‘25th Mandatory Prosecution Request Deliberation Committee’ held on the 30th. If the Fair Trade Commission determines a violation but does not file a criminal complaint, the Ministry of SMEs and Startups can request the Fair Trade Commission to file a complaint considering the extent of damage to small and medium enterprises in cases involving violations of the Fair Trade Act and others.

According to the Ministry, Samsung Heavy Industries delayed issuing written documents while outsourcing electrical and mechanical machining work of ships to subcontractors from September 2019 to April 2020. Written documents should have been issued before the start of work, but for a total of 10 contracts, they were not issued until the work was completed. For 19 contracts, the written documents were issued at least 1 day and up to 102 days after the work had started. Samsung Heavy Industries received corrective orders and a fine of 36 million KRW from the Fair Trade Commission in June last year for these charges.

Issuing written documents is a basic obligation of the original contractor under the subcontracting contract to protect the rights and interests of subcontractors. It is a measure to prevent disadvantages to subcontractors and subsequent disputes by issuing written documents detailing the contract before the start of work.

The Ministry of SMEs and Startups judged that Samsung Heavy Industries repeatedly violated the law despite corrective orders from the Fair Trade Commission over several years, and decided to request prosecution to impose strict sanctions to protect subcontractors in a subordinate position.

Jeil Feed deducted approximately 3.07645 billion KRW in overdue interest, which occurred due to delayed payment of feed fees by 1,817 livestock farms and other direct transaction partners from January 2009 to December 2021, from the commissions of its 130 affiliated dealerships. As a result, it received corrective orders and a fine of 976 million KRW from the Fair Trade Commission in May last year. The Ministry of SMEs and Startups viewed that Jeil Feed unfairly passed on overdue interest to dealerships that had no obligation to collect payments over a long period.

Won Young-jun, Director of the Small Business Policy Office at the Ministry of SMEs and Startups, said, “The mandatory prosecution request system is a measure to protect small and medium enterprises from unfair transactions by businesses in a superior position in transactions,” adding, “The decision to request prosecution in this case of violation of the obligation to issue written documents is significant in emphasizing the seriousness of the basic obligations that original contractors must observe to prevent disadvantages to subcontractors and to preemptively avoid subsequent disputes in subcontracting contracts.”