According to South Korean media reports, the Korea Fair Trade Commission (KFTC) will initiate consent decree proceedings against Samsung Heavy Industries for violating South Korea’s Fair Subcontracting Transactions Act.
Previously, Samsung Heavy Industries was investigated by the KFTC for allegedly violating the Fair Subcontracting Transactions Act by delaying the issuance of contracts when signing outsourcing agreements with internal subcontractors during shipbuilding operations.
It is understood that South Korea’s “consent decree” system allows companies under investigation or review by the KFTC to propose their own remedial measures, such as compensation for damages and corrective actions; if the KFTC deems the proposed measures reasonable, the case may be closed without determining whether any violations occurred.
Samsung Heavy Industries’ proposed remedy for the aforementioned violations is to comprehensively overhaul its management systems regarding the delayed issuance of contracts and to implement supporting measures totaling 11.3 billion won (approximately $7.4591 million).
Specifically, Samsung Heavy Industries has proposed several corrective measures to regulate trading practices: upgrading its contract management system, fully adopting standardized outsourcing contracts, providing training for employees and internal subcontractors, and establishing a permanent consultative body between the general contractor and subcontractors.
Support measures include: increasing the internal subcontractor support fund by 3.05 billion won annually; establishing holiday travel and leave allowances, with an annual budget of 5.25 billion won; implementing a skilled worker matching savings plan, where employees contribute 1.6 million won and the company subsidizes 8 million won, for a total investment of 2 billion won; and expanding the Joint Employee Welfare Fund (adding 1 billion won to the existing 2 billion won to cover items such as children’s tuition).
After conducting an assessment, the KFTC determined that the remedial plan submitted by Samsung Heavy Industries met the relevant requirements for initiating the consent decree process and formally launched the review process.