April 25, 2024

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[THE INVESTOR] Korea unveiled a series of measures on Dec. 28 aimed at promoting “fair” transactions between large firms and smaller business partners, the centerpiece of which is preventing “exclusive” contracts.

Under the measures, the Fair Trade Commission said the government will step up efforts to raise transparency in transactions between large players and smaller ones. In such dealings, bigger companies have used their dominant market positions to excessively engage in unfair business practices.

Bigger players will be banned from signing exclusive contracts with smaller ones that place unfair demands on the junior partner.

Related laws will be revised early next year, according to the FTC.

Also, in many cases, prime contractors are frequently accused of delaying payment or excessively cutting prices when they delegate some portion of construction to smaller partners. Such practices are blamed for forcing tough business conditions on many subcontractors, and some critics say that they dampen the overall growth of the economy.

The measures appear to be in line with the government’s recent move to regulate the nation‘s large companies for failing to fulfill their social responsibility, citing their “unfair business practices” toward small and medium-sized companies.

Some policymakers have blamed such practices for squeezing the bottom lines of smaller companies, which they claim has widened the profit gap with large enterprises that have high earnings.

By Alex Lee and newswires (alexlee@heraldcorp.com)