South Korea fines 5 delivery firms $2 million for unfair subcontracting
En resumen
- South Korea's Fair Trade Commission fined five major parcel delivery companies a combined $2 million for violating subcontracting laws.
- The firms allegedly exploited their dominant market position by forcing unfair contract terms and failing to issue written agreements to subcontractors.
Resumen generado por IA
Por qué importa
South Korea's Fair Trade Commission (FTC) has fined five major parcel delivery companies a combined 3 billion won (US$2 million) for violating subcontracting laws. The investigation was prompted by allegations that these companies, which hold over 90% of the market, abused their dominant positions by imposing unfair contract terms and failing to issue written agreements to subcontractors.
By Kang Yoon-seung
SEOUL, May 18 (Yonhap) -- South Korea's antitrust watchdog on Monday imposed a combined 3 billion won (US$2 million) in fines on five parcel delivery companies for violating the subcontracting law by taking advantage of their dominant position in the market.
The Fair Trade Commission (FTC) said the actions come after the five companies -- Coupang Logistics Services, Lotte Global Logistics Corp., CJ Logistics Corp., Hanjin Transportation Co., Ltd. and Logen Co., Ltd. -- forced unfair contract terms on subcontractors while failing to issue written agreements.
The investigation came amid growing demand for delivery services in South Korea, with the average number of parcel deliveries per person exceeding 100 a year since 2023.
The five companies account for 90.5 percent of the market thanks to their nationwide delivery networks, the FTC said, adding that it launched the probe after allegations that they had abused their dominant market positions.
For example, the companies shifted losses caused by missing or damaged parcels onto subcontractors.
They also included ambiguous terms that allowed them to terminate contracts without giving subcontractors an opportunity to present their case.
The contracts contained clauses requiring local delivery operators to bear civil and criminal liability arising from safety accidents and to compensate the companies for losses resulting from labor disputes.
"Through the investigation, the FTC has corrected the widespread practice of refusing or delaying the issuance of written contracts in the parcel delivery industry," the agency said in a release.
The watchdog said a total of 2,055 contracts were not formally issued even on the day subcontractors began performing their duty and were delayed for up to 761 days.
"We have ordered the companies to delete or revise unfair contract terms that they unilaterally established," it added.
The FTC said it will continue to carry out investigations on violations of the subcontracting law closely linked with the people's daily lives and take stern countermeasures when such practices are identified.
Preguntas abiertas
- Will the companies appeal the fines?
- What specific changes will be made to the contract terms?
- Will there be further investigations into other companies in the delivery sector?
- What is the timeline for the companies to comply with the FTC's orders?
