Line Construction, a general contractor that owns the "EG the1" apartment brand, has been sanctioned by the Korea Fair Trade Commission after it was found to have paid subcontract fees past the legally required deadline and withheld approximately 1.2 billion won ($818,000) in late-payment interest.

The Fair Trade Commission said Monday it had issued a corrective order against Line Construction for violating the Subcontracting Act.

The Korea Fair Trade Commission at Government Complex Sejong in Eojin-dong, Sejong [Newsis]
The Korea Fair Trade Commission at Government Complex Sejong in Eojin-dong, Sejong [Newsis]

According to the Fair Trade Commission, Line Construction hired 64 subcontractors to carry out stonework, gas facility installation, and electrical and telecommunications work on apartment projects between October 2019 and July 2024, but paid the subcontract fees more than 60 days after receiving the completed work, exceeding the statutory payment deadline.

The company also failed to pay 1.16 billion won in late-payment interest that accrued during that period.

The Subcontracting Act requires prime contractors to pay subcontract fees within 60 days of accepting the completed work. Any payment made after that deadline must include interest for the overdue period at a rate set by the Fair Trade Commission. In Line Construction's case, an annual rate of 15.5 percent applied at the time.

However, after the Fair Trade Commission launched its probe, Line Construction voluntarily paid all outstanding late-payment interest and remedied the violations on its own.

The unpaid interest amounted to about 0.2 percent of total subcontract payments over the period under investigation. Under the commission's case-handling rules, voluntary remediation or a violation ratio below 10 percent typically warrants only a warning.

The commission said it nonetheless issued a corrective order rather than a simple warning, citing the fact that 64 subcontractors had suffered losses and that the total amount of unpaid interest was not negligible.

Meanwhile, Line Construction is one of 30 mid-sized construction companies that have signed a subcontracting cooperation agreement with the Fair Trade Commission. A commission official said the violations occurred before the agreement was signed, adding that Line Construction joined the cooperation pact to prevent similar incidents from recurring.


y2k@heraldcorp.com