Two companies fined for contract violations

Line Plus and Snet Systems were fined a total of 163 million won ($137,000) for subcontractor law violations.

According to the Fair Trade Commission (FTC), the two companies were found to have issued contracts for services, such as construction work, after the services were already being provided by contractors. It cited nearly 200 instances of this irregularity from January 2015 to May 2017.

Korean subcontractor laws stipulate that contracts be signed before any service is provided.

The FTC said that Line Plus, a wholly-owned subsidiary of Line, signed contracts with 19 service providers on 27 occasions after the work had started. It had also signed contracts after it had completely received services five times.

Snet Systems, an IT company that focuses on cloud systems, signed contracts 168 times for services or construction work already underway. The company also issued contracts 12 times after the services were complete.

Line Plus faces a fine of 59 million won, while Snet Systems was fined 104 million won.

The regulator said it expects the punishments to reduce the occurrence of such practices, which are seen as widespread in the tech industry.

The latest measures from the FTC also fall in line with new chairwoman Joh Sung-wook’s vow to crack down on unfair practices in Korean business culture stemming from hierarchical relations between businesses.

The chairwoman prioritized the issue, along with consumer protection, fostering an innovative market and addressing the issue of large corporations hogging business in her inauguration speech earlier this month.

BY CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr]