Fair Trade Commission imposes fine on SK Ocean Plant for not providing subcontract agreement

Company: "An Incident That Occurred During Samkang M&T Era"

The Fair Trade Commission imposed a fine on SK Ocean Plant for violating the obligation to issue written documents for subcontracting.

On the 25th, the Fair Trade Commission announced that it decided to issue a corrective order and impose a fine of 52 million KRW on SK Ocean Plant for failing to issue contracts while outsourcing parts manufacturing to subcontractors, violating the Subcontracting Act.

SK Ocean Plant is accused of violating the written issuance obligation while outsourcing the manufacturing of ship parts to 48 subcontractors with a total of 436 cases from February 2019 to December 2021. For 20 transactions related to plating and painting of ship parts outsourced to 5 companies, only purchase orders without signatures or seals were issued, citing one-time transactions as the reason, without separate written contracts. For 416 cases of modification and additional work related to the manufacturing of ship parts outsourced to 43 companies, written documents containing statutory matters such as the content of the subject matter and subcontracting payment were not issued, and these were replaced with settlement agreements only 9 to 100 days after the completion of the work.

SK Ocean Plant argued that due to the nature of the shipbuilding industry, where prior prediction is difficult and design changes are frequent, prior written issuance is not necessary when outsourcing modification and additional work, but this was not accepted.

A Fair Trade Commission official said, "We took strict measures after confirming the persistent practice of failing to issue written documents related to modification and additional work in the shipbuilding industry despite several FTC actions," adding, "Recently, the Supreme Court also confirmed in precedent that the obligation to issue written documents under the Subcontracting Act cannot be exempted on the grounds of modification and additional work."

An SK Ocean Plant official explained, "This issue occurred during the Samkang M&T period, and no violations of the Subcontracting Act have occurred since SK's acquisition in 2022," adding, "We have established a compliance management system by introducing a dedicated management organization and a fair trade compliance program to thoroughly manage and ensure that no damage occurs to subcontractors."