1) Claims by Parties and Decision Details
It is true that there was a delay in accepting certain products as inventory when the plaintiff
had ceased to use them31. Yet, in order to respond to frequent changes in market demands, the
plaintiff agreed with 6 subcontractors on the timing to process cancelled products. The
plaintiff argued that the subcontractors did not incur any actual losses as they had made
complete financial reimbursement or compensation by new orders. Considering its long-term trade relationship with subcontractors, the plaintiff claimed that such practice could not be
regarded as undue delayed receipt. In addition, it also argued that the KFTC’s decision was
illegitimate as it duplicates regulation on undue deferred receipt and undue price discount in
the case of certain subcontractors. The decision dismissed the plaintiff’s claim as follows. “According to Subparagraph 2,
Paragraph 1, Article 8 of the Subcontract Act, a contractor shall not refuse nor delay the
receipt of acceptance of a product, provided that this shall not apply where there are reasons
attributable to the subcontractor. However, from January 3, 2003 to May 30, 2005, the
plaintiff had delayed receipt on components produced by 46 subcontractors. The reasons for
delay in receipt included discontinuation of the related model, specification modifications,
less production volume, overseas transfers, production cancellation and delay, all of which
could not be attributable to subcontractors. According to a document of the plaintiff, ‘the
2003 Audit Interview and Response’, the plaintiff acknowledges that due to delay in receipt
even when the due dates had passed, the subcontractors were subject to more inventory
burden and which thereby led to financial loss. Given these facts, despite any agreements
between the plaintiff and subcontractors, financial reimbursement or compensation by
additional product orders, it is hard to see that there was any justifiable reason for such delay
of receipt.”