SCIA Refers Two Manufacturers in Its First Unfair-Trade Case; Hundreds of Millions of Won in Goods Payments Unpaid

[Financial News] Two manufacturers accused of unfairly reducing or withholding several hundred million won in subcontracting payments owed to subcontractors have been summarily indicted following supplementary investigations by the Serious Crimes Investigation Agency (SCIA). The case is said to be SCIA’s first unfair-trade case.
On the 2nd, the Seoul Regional SCIA’s Anti-Monopoly Investigation Bureau, whose acting chief is Kim Jeong-hwan, announced that it had referred manufacturers A and B to the Seoul Eastern District Prosecution Office on the 27th of last month on suspicion of violating the Act on Fair Transactions in Subcontracting. Two days later, on the 29th, the Seoul Eastern District Prosecution Office summarily indicted the two companies, seeking fines and other penalties.
A and B are accused of unilaterally reducing the subcontracting payments of several hundred million won agreed with subcontractor C under contracts made between 2020 and 2022, paying reduced amounts after receiving the goods or withholding payment altogether. The case had previously been investigated by prosecutors following a complaint by the Korea Fair Trade Commission.
The Seoul SCIA took over the case from the Seoul Eastern District Prosecution Office on the 19th of last month. Some of the alleged offenses were nearing the expiration of the statute of limitations on the 1st of this month, and further investigation was needed to establish how the subcontracting payments had been reduced or withheld.
After taking over the case, SCIA conducted supplementary investigations, including questioning people connected to the ordering companies. The agency reportedly comprehensively established the allegations against the principal contractor, which had unfairly reduced subcontracting payments owed to subcontractors and failed to pay them. During the investigation, it regularly discussed the progress of the case with the Prosecution Office by phone. Some portions for which the statute of limitations had expired were reportedly not referred to prosecutors.
A summary indictment is a procedure in which prosecutors ask a court to impose a fine or other penalty without a formal trial. The disposition has not been finalized because the court has yet to issue a summary order.
A Seoul SCIA official said, “Unfair practices in subcontracting transactions harm individual companies and undermine the health of the industrial ecosystem as a whole,” adding, “We will continue to work closely with the Prosecution Office and respond thoroughly to crimes that undermine fair trading practices.”
 
[email protected] Choi Eun-sol Reporter