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Fair trade

 

Incident
Handling
Procedure

Incident Handling Procedure of FTC(Fair Trade Conmission)

  • 1. Clue to accident

    Report, Noticing the receipt of reporting

  • 2. Recognition of incident

    No commencement of deliberation (Deficit in application requirements or cancellation of reporting), Commencement report of incident deliberation (Review on whether the Subcontracting Act applies or not)

    Dispute Arbitration Council (No arbitration, Arbitration) - Report - Investigation suspension (Investigation becomes difficult due to unknown whereabouts) OR Investigation on the status of violation of the Subcontracting Act

  • 3. Handling of Incident

    Acquittal (No violation or no evidence on violation of the Subcontracting Act), End of deliberation procedure (Deficient in application requirements / Difficult to judge the status of violation, due to the cancellation of the reporting during the investigation), Closing (Difficult to take a corrective action on the violation), Warning (violation is trivial or no benefit from corrective action), Order to correct (Violation of the Subcontracting Act )

  • 4. Means to implement obligation under the Subcontracting Act (Means to ensure effectiveness of the Subcontracting Act)

    Order to announce to the public(Violation is serious and intentional violation motive), Penalty(Malicious or habitual), Restriction of participation in bids / Request business suspension(Hugely malicious or habitual), Prosecution(Non-performance of order to correct)

 

Disciplinary
Action

Discipline on the Violation of Law

Corrective Action (Article 25 of the Subcontracting Act)

  • The Fair Trade Commission (FTC) may recommend or order payment of the subcontract cost, suspension of the law violation,
    deletion or revision of special clauses, prevention of recurrence and other necessary actions to the client or general contractor
    with regard to the violation of general contractor’s obligations and prohibitions and client’s obligations.
  • The FTC may order the business that received an order to correct to publically announce the fact.

Penalty (Article 25.3 of the Subcontracting Act)

  • The FTC may impose penalty on the client, general contractor or subcontractor that violated the Subcontracting Act within the
    subcontract cost, with which manufacture was commissioned to the subcontractor from the Subcontracting Act-violating client
    and general contractor, or within not exceeding two times more than the subcontract cost with which manufacture was commis-
    sioned from a client and a general contractor.
  • The penalty amount is decided in consideration of four such factors as violation type, violation ratio, the number of violation
    types and past violation history.

Public Announcement of Habitual Violator List (Article 25.4 of the Subcontracting Act)

The FTC Commissioner shall publicly announce the list of habitual violators that accumulated four or more of penalty scores
among the businesses receiving three times or more of warnings or corrective actions from the FTC, due to violation of the
Subcontracting Act for the past three years from the immediately previous year. However, an action, for which a procedure of
protest against the decision like application for appeal is underway, is excluded.

Request to Restrict Participation in Bids and Request to Suspend Business (Article 26.2 of the Subcontracting Act)

The FTC imposes penalty score to the general contractor or subcontractor that violates the act in consideration of the degree of
violation and damage. If the penalty score exceeds a certain level, the FTC shall request the restriction of bid participation qualifi-
cation, business suspension under the Construction Industry Basic Act, and shall request taking necessary actions for fair sub-
contracting transactions to the relevant administrative agency head (request for restriction of bid participation: exceeding 10
accumulated penalty points. Request for business suspension: exceeding 15 accumulated penalty points).

HOWEVER, FIVE POINTS AND 10 POINTS, RESPECTIVELY BY THE REVISION (NOVEMBER 27, 2013) OF THE ACT (EXECUTED ON NOVEMBER 29, 2014)

Criteria of Penalty Score by Corrective Action Type

Tabulating accumulated points for three years by calculating each corrective type score on the law violation types

Criteria of Penalty Score by Corrective Action Type table
Warning (fact-finding-
survey in writing)
Warning
(reporting)
Recommendation
of Correction
Order to Correct Penalty Prosecution
0.25 0.5 1 2 2.5 3

 

Incentives
Incentives table
Requirements Details

Selection of Model Company in Subcontracting Transaction (based on 2013)

  • 1. Paying subcontract cost in cash or cash equivalents for
        one year
  • 2. General contractor without law violation for three years
  • 3. Model general contractor supporting subcontractor program
  • Exemption of fact-finding survey of subcontracting
    transaction in writing for two years from the selection date
  • Reduction of accumulated penalty score by two points
    in case of maintaining 100% cash settlement ratio

Agreement Implementation Rating

  • 1. Best (95 points or more)
  • 2. Excellent (90 points or more)
  • 3. Good (85 points or more)
  • Exemption of ex officio investigation and fact-finding survey
    in writing for two years
  • Exemption of ex officio investigation and fact-finding survey
    in writing for one year
  • Exemption of fact-finding survey in writing for one year

Use of standard subcontracting agreement for
the past immediate one year 

- Special education of subcontracting for CEO & Executives

- Citation from FTC Commissioner

Implementation evaluation upon signing partnership
agreement and within the past immediate one year

Company for

Cash settlement ratio: 100%

Cash settlement ratio: 80~ less than100%

E-bid: 80% or more

Reduction of two accumulated penalty points for the past
three years

Reduction of 0.5 point (CEO) and 0.25 point (executive) from
accumulated penalty score for the past three years

Reduction of two accumulated penalty points for the past
three years

Best: 6 points / Excellent: 4 points/ Good: 2 points

Reduction of one accumulated penalty point for the past
three years

Reduction of 0.5 accumulated penalty point for the past
three years

Reduction of 0.5 accumulated penalty point for the past
three years

 

 

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