The Fair Transactions in Subcontracting Act stipulates that where it is inevitable to adjust a subcontract consideration due to variations in supply costs, the subcontractor may request the principal contractor to adjust the subcontract consideration, and that principal subcontractors shall not take retaliatory measures on the grounds of a request to adjust a subcontract consideration, etc.
However, the current Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises does not contain such provisions and as a result, when supply costs increase after a transaction effected on consignment and commission has been entered into, most of the commissioned enterprises solely bear the increase in prices without requesting a higher price of delivered goods out of fear that the transaction may decrease in quantity or be discontinued, etc.
Thus, critics point out that for the cost of delivered goods of small-medium enterprises to reflect reality, the system for adjustments to and negotiations on the cost of delivered goods must cover transactions effected on consignment and commission that are not subcontract transactions. Also, it is necessary to prohibit retaliatory measures taken on the grounds of requests for adjustments to prices of delivered goods to ensure the effectiveness of this system.
Accordingly, the Amendment newly inserts provisions concerning adjustments to prices of delivered goods following variations in supply costs, prohibits retaliatory measures taken on the grounds of requests for adjustments to prices of delivered goods, and introduces a punitive compensation system for retaliatory measures.

Details

A. Enable commissioned enterprises to request the commissioning enterprise to adjust the price of delivered goods or request small-medium enterprise cooperatives for a negotiation to adjust the price of delivered goods where the adjustment is inevitable due to variations in the supply costs of goods, etc.; and enable them to request the Minister of SMEs and Startups to mediate a dispute where the negotiation is not successful (Article 22-2 and Article 28, paragraph 1, subparagraph 2-2 newly inserted)
B. Prohibit commissioning enterprises from reducing the quantity of a transaction effected on consignment and commission, discontinuing a transaction, or taking any other adverse action on the grounds that a commissioned enterprise has requested the commissioning enterprise to adjust the price of delivered goods or has requested the Minister of SMEs and Startups to mediate a dispute (Article 25, paragraph 1, subparagraph 14)
C. Prescribe that any commissioning enterprise that has taken retaliatory measures against a commissioned enterprise that has requested an adjustment to the price of delivered goods, etc., shall be liable for up to treble damages, and shall be punishable by a fine of up to 300 million won (Article 40-2, paragraphs 2 and 3 and Article 41-2 newly inserted)

Prohibit commissioning enterprises from reducing the quantity of a transaction effected on consignment and commission, discontinuing a transaction, or taking any other adverse action on the grounds that a commissioned enterprise has requested the commissioning enterprise to adjust the price of delivered goods or has requested the Minister of SMEs and Startups to mediate a dispute (Article 25, paragraph 1, subparagraph 14)