The Ministry of SMEs and Startups said on the 9th that it had found 23 violations at four companies, including coffee franchises and food manufacturers, in an ex officio investigation into compliance with the country's supply price-linking system in plastic container transactions. The ministry ordered corrective action and imposed penalty points and fines on the companies.
The investigation was launched after a surge in international oil prices and in the cost of naphtha and ethylene, key raw materials for plastics, in the wake of the recent Middle East conflict drove up costs for small and mid-sized makers of plastic containers. The ministry focused on whether the price-linking system was working as intended in practice.
The ministry first conducted a written survey of 15 contracting companies across three industries with heavy demand for plastic containers: food manufacturing, beverage manufacturing and coffee franchises. It then narrowed the list to seven companies — those suspected of violations, those that submitted incomplete documents, and those with large numbers of subcontractors — and carried out on-site inspections alongside a survey of their subcontractors.
The investigation confirmed violations of the law on mutually beneficial cooperation between large and small companies at four firms: two food manufacturers and two coffee franchises. The 23 violations consisted of five cases of delayed issuance of contract agreements, six cases of delayed issuance of price-linking agreements and 12 cases of failure to issue price-linking agreements.
Depending on the severity of the violations, the ministry ordered corrective action, imposed two penalty points and fines of up to 10 million won, and issued training orders.
"It runs counter to a fair market economy for small and financially weak subcontractors to shoulder alone the burden of soaring global raw material prices," said Lee Eun-cheong, director general of the ministry's Win-Win Cooperation Policy Bureau. "We will continue to monitor compliance with the supply price-linking system so that a trading culture in which large and small companies share the burden of raw material costs can take root."
