The Korean government will bring criminal charges against CEOs of large firms that force suppliers and sub-contractors to lower their product prices
June 14, 2013 Leave a comment
2013-06-13
CEOs to be punished for ‘forced price cuts’
By Yi Whan-woo
The government will bring criminal charges against CEOs of large firms that force suppliers and sub-contractors to lower their product prices.
The Fair Trade Commission (FTC), the country’s anti-trust watchdog said on Friday that those convicted will face a maximum fine equal to three times the financial damage suffered by the small businesses.The FTC added that it will work with other ministries to monitor large businesses for any forcing of price cuts on products, to nurture small- and medium-sized enterprises (SMEs).
“Our measure focuses on prevention of unethical commercial activities by the large firms but it is also to nurture a favorable business environment for SMEs,” said FTC Chairman Noh Dae-lae at a press conference at the government complex in downtown Seoul,
The FTC-led team of ministries unveiled a set of measures as part of efforts intended to promote mutual prosperity between family-owned conglomerates and SMEs. President Park Geun-hye’s administration has sought to establish a fairer, more competitive environment since she took office in February.
The measures are part of a strategy the government announced to break what it describes as a “vicious cycle” that could result in a further widening of the gap between large and small businesses.
The government said it will strengthen its requirement for large firms to store information and data about price-setting with contracted suppliers. The FTC said such a move is anticipated to serve as a “deterrent” against unwarranted price cuts.
Along with the preventive measures, the FTC said that it plans to toughen its punishment system.
“Being sentenced with a fine means one faced criminal charges, and that’s what the CEOs of conglomerates will get for unfair business activities,” an FTC official said.
The government noted that it will help smaller companies with its own investigation data and legal counseling, while providing them with financial support to cover costs stemming from pursuing lawsuits.
The government said that it also plans to refer heads of companies who are caught using their market power to force price cuts from suppliers to prosecutors for further investigation.
The country’s conglomerates form the backbone of the economy as seen from Samsung Group that provides some 20 percent of Korea’s exports alone. The SMEs provide more than 80 percent of the country’s jobs.
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