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STX fined for cutting payments to contractor

STX Offshore and Shipbuilding Co. will face punitive measures for unfairly reducing subcontracting fees to a service provider, a state-run antitrust regulator said Monday.

The nation’s leading shipbuilder, based in Changwon, South Gyeongsang Province, had signed a contract with a subcontractor, identified by its initial H, since 2008 for the work of putting vessels together to be moved.

For six months since October 2009, the company was found to have cut the contract price arbitrarily by 25 to 30 percent citing “operational difficulties amid a decrease in orders and soaring raw materials costs.”

However, the price cuts were baseless and against a related antitrust law, according a report by the Fair Trade Commission that was released on Monday.

The FSC explained that the subcontractor provided the labor force for a specific process, which has nothing to do with fluctuations in raw material costs, while there was no cut in wages during the period in the industry.

The antitrust watchdog ordered the shipbuilder to pay the cuts worth 259 million won ($245,000) to the company and an additional 51 million won as fines.

“The STX shipbuilder shifted all the responsibility for an industrial recession to the subcontractor, without making any efforts itself, such as rationalization of management,” said Park Jae-sung, an investigator at the FTC’s Busan office.

“The strict measures against the shipbuilder are expected to have a direct effect in preventing similar cases in the future.”

By Lee Ji-yoon (jylee@heraldcorp.com)
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