Ministry of SMEs Requests Fair Trade Commission to Prosecute Emons Furniture for Violating Subcontracting Act

Unfair Consignment Cancellation, Violation of Written Issuance Obligation, and Nonpayment of Bill Discount Fees
Long-term Disadvantages for Affected Companies

The Ministry of SMEs and Startups announced on the 19th that it held the '28th Mandatory Prosecution Request Deliberation Committee' and decided to request the Fair Trade Commission to file a complaint with the prosecution against Emons Furniture for violating the Subcontracting Act.

Emons Furniture, which is subject to this prosecution request, caused significant damage by continuously failing to issue agreements to subcontractors with whom they have had long-term subcontracting relationships and by causing management difficulties for the affected subcontractors due to unfair cancellation of consignment contracts.

Regarding the main violations, Emons Furniture unilaterally canceled five manufacturing consignment contracts for apartment site furniture handles from August to November 2021, despite the affected companies having no responsibility for the issues. From August 2018 to November 2021, they consigned the manufacturing of 49 apartment site furniture parts to subcontractors without providing written documents containing legally required information. From August 2018 to November 2021, they paid subcontracting fees amounting to 4.07 billion KRW by promissory notes but failed to pay approximately 32.79 million KRW in discount fees.

Emons Furniture had previously received an order to prevent recurrence and a fine of 360 million KRW from the Fair Trade Commission in June due to these violations. The Ministry of SMEs and Startups judged that Emons Furniture’s actions?failing to provide written documents with legally required information to subcontractors who are highly dependent on the transactions over a long period and unilaterally canceling manufacturing consignment contracts worth about 1.3 billion KRW, causing management difficulties for the affected subcontractors?constitute serious violations requiring sanctions and thus decided to request prosecution.

Won Young-jun, Director of the Small Business Policy Office at the Ministry of SMEs and Startups, stated, “The mandatory prosecution request system is designed to protect small and medium enterprises from unfair trade practices by businesses in a superior transactional position,” adding, “This prosecution request is significant as it calls for strict punishment for the chronic issues in the subcontracting sector, such as failure to issue written documents and unfair consignment cancellations, which violate the application of punitive damages.”

Director Won further emphasized, “We plan to take strict measures against large companies that abuse their superior position to harm small and medium enterprises or repeatedly commit chronic unfair practices violating the law.”