- Corrective Orders and Fines for Violations of Written Documentation Requirements -
The Korea Fair Trade Commission (hereinafter referred to as “KFTC”) conducted an ex officio investigation into the gaming industry,* a growing content creation sector, and issued corrective orders to three companies—Krafton Inc., Nexon Korea Corporation, and NCSoft Corporation (hereinafter referred to as the “three businesses”)—for violating written documentation requirements. Additionally, fines were imposed on Krafton (36 million KRW) and Nexon Korea (32 million KRW).
The “Act on Fair Subcontract Transactions” stipulates that, prior to a subcontractor beginning work commissioned by a principal contractor, the principal contractor must issue written documentation specifying the subcontract payment, method of payment, and other details of the subcontract agreement.
This obligation is fundamental to establishing a fair subcontracting order by preventing unnecessary disputes between parties and protecting the rights of subcontractors through accurate documentation of the subcontracting terms.
However, the three businesses violated this obligation by issuing the required documentation—containing details of subcontract agreements for game-related tasks such as graphics, motion, and audio production—only after the subcontractors had already commenced work. In some cases, the documentation was issued only after the contracts were completed.
As a result, the KFTC ordered the three businesses to prevent any recurrence of similar or identical violations. Additionally, Krafton and Nexon Korea were fined.
This action is significant as it sanctions a transactional practice common in the gaming industry—delayed issuance of documentation—and raises awareness among principal contractors to prevent recurrence of such acts.
The KFTC plans to continue monitoring violations of the “written documentation requirements” in subcontracting, which can worsen the already disadvantaged position of subcontractors or cause disputes related to subcontracting. Any detected violations will be dealt with strictly.
Furthermore, the KFTC will concentrate its investigative efforts on emerging industries, such as software and content creation, to combat unfair subcontracting practices that infringe on subcontractors’ rights. Through stringent law enforcement, the KFTC aims to foster a fair subcontracting order in these industries.