Corrective order and penalty surcharge of 320 million won imposed for violation of the duty to issue written documents
2026. 7. 20.
The Korea Fair Trade Commission (KFTC, Chairperson Biung-Ghi Ju) decided to impose a corrective order and a penalty surcharge of 320 million won against Daebo Magnetic Co., Ltd. for violating Article 3 (Duty to Issue Written Documents) of the Fair Transactions in Subcontracting Act, in connection with its subcontracting of demagnetization tank, frame, and screen manufacturing. Demagnetization tanks refer to equipment that removes even minute metallic foreign substances contained in raw materials.
From November 2021 to July 2022, Daebo Magnetic Co., Ltd. placed a total of 51 orders for demagnetization tank, frame, and screen manufacturing with two subcontractors, and in doing so, failed to issue to the subcontractors, before the start of work under the subcontract, written documents containing the matters prescribed under Article 3 of the Act along with the signatures or names and seals of both the principal contractor and the subcontractor.
Specifically, in 50 transactions, Daebo Magnetic Co., Ltd. placed individual orders by sending subcontractors emails containing only the drawing and item name, order quantity, and delivery date, and in one transaction, it placed an individual order by issuing only a "purchase order-cum-contract" that lacked the signature or name and seal of either party and omitted some of the legally required entries.
Under Article 3 of the Act, when a principal contractor subcontracts manufacturing or other work to a subcontractor, it must record the legally required matters, such as the subcontracting payment and its method of payment, and issue to the subcontractor, before the subcontractor begins work for the manufacturing and delivery of goods, a written document signed or sealed with the names of both the principal contractor and the subcontractor.
Accordingly, the KFTC decided to issue a corrective order and impose a penalty surcharge of 320 million won against Daebo Magnetic Co., Ltd.'s violation of the duty to issue written documents, in order to prevent the recurrence of the same or similar violations in the future.
For reference, the KFTC recognizes that the current statutory cap on penalty surcharges is low relative to the severity of such violations, limiting the effectiveness of sanctions, and is pursuing reforms to the penalty surcharge system, including raising the base amount for calculating surcharges and rationalizing the surcharge assessment standards. The KFTC plans to continue strengthening deterrence against legal violations through ongoing system improvements, so that penalty surcharges commensurate with the severity of violations can be imposed going forward.