South Korea's Fair Trade Commission has imposed a 1.47 billion won ($1.04 million) fine on Hanon Systems, an affiliate of Hankook & Company Group, for violating the Fair Transactions in Subcontracting Act.
The FTC announced Wednesday that Hanon Systems, an automotive climate control products manufacturer, failed to provide written contracts containing legally required details—including payment terms and scope of work—when commissioning mold manufacturing from nine subcontractors between May 15, 2020 and May 14, 2023.
The investigation also found the company failed to pay approximately 95 million won in bill settlement fees when processing subcontracting payments through promissory notes. Additionally, Hanon Systems did not pay 1.39 billion won in late payment interest for delayed payments.
The FTC noted that verbal contracts and delayed payments remain widespread in the mold manufacturing sector. "We will continue monitoring illegal subcontracting practices and take stern action when violations are confirmed," the commission said.
Hanon Systems stated it plans to file an administrative lawsuit against the FTC's decision, arguing that "industry-specific circumstances and practices need to be fully considered."