The government unveiled a set of measures on Thursday to beef up its surveillance and punishment of conglomerates twisting the arms of smaller suppliers in order to push them to lower their product prices.
The Fair Trade Commission (FTC), the Ministry of Trade, Industry and Energy and other related agencies will work together in monitoring large businesses to prevent the forcing of price cuts of supplies without any warranted reasons.
The government added that it will toughen its request for firms to store information and data on the price-setting process tied to their supply contracts, a move that it expects will serve as a "deterrent" against unwarranted price cuts.
Those measures are part of steps that the government announced in order to break what it calls the "vicious cycle" that could result in widening gaps between large and small businesses. It is also in line with the government's ongoing efforts to establish a fairer, competitive environment.
Along with those preventive measures, the government said that it plans to toughen its punishment system.
A related law will start to go into effect in late November that will oblige large companies to compensate for up to three times the size of the damages they were found to have inflicted on smaller suppliers by engaging in such unfair business practices.
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 incurring costs stemming from filing lawsuits.
The government said that it also plans to refer heads of companies involved in using their market power to force price cuts from suppliers to prosecutors for more investigation.
FTC Chairman Noh Dae-lae told a press conference that there is no worry that such an action could dampen economic activities, assuring that his agency will not allow any law-abiding business people to be investigated by prosecutors.
Noh also emphasized that more efforts should be made to resolve the unwarranted price cut issue.
"The unwarranted price cut issue in the corporate sector cannot be resolved only with regulation. It should be followed by the overall improvement in management environment for small- and medium-sized companies," he said. (Yonhap News)
