April 20, 2024

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[THE INVESTOR] Korea’s corporate watchdog said on April 25 that it has imposed a 3.3 billion won (US$3.10 million) fine on LG Electronics for unfair business practices.

According to the Fair Trade Commission, LG agreed with its 24 subcontractors to cut prices of 1,318 parts used for its smartphone between July 2014 and March 2017.

But LG retroactively applied the revised contract terms to its previous parts supply deal with the subcontracting companies, causing a total 2.88 billion won reduction in goods payment, according to the FTC.

Consequently, the subcontractors suffered an average 120 million won in losses, it added.

The corporate watchdog also ordered LG to take corrective measures.

Under the country’s fair trade laws, unfair business arrangements, such as the transfer of increased labor costs to subcontractors and franchises, are prohibited.

By Song Seung-hyun and newswires (ssh@heraldcorp.com)