Line Construction Sanctioned by Fair Trade Commission Over Delayed Payments and Unpaid Interest of 1.2 Billion Won

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Line Construction, a general construction company that owns apartment brands such as EG the1, has faced sanctions for delaying subcontract payments and failing to pay nearly 1.2 billion won in delay interest.

The Fair Trade Commission (FTC) announced on July 27 that it has issued a corrective order against Line Construction for violating the Subcontracting Act.

Line Construction entrusted 64 subcontractors with apartment stonework, gas facility construction, and telecommunication construction between October 2019 and July 2024. Although it received the completed construction work, it failed to pay the subcontract fees within the 60-day limit.

It was revealed that the company did not pay a total of 1,161,840,000 won in accrued delay interest during this process.

According to the Subcontracting Act, if subcontract payments are made after 60 days from the date of receiving the deliverables, delay interest must be paid for the excess period in accordance with the interest rate announced by the FTC.

In the case of Line Construction, it was required to pay an annual interest rate of 15.5%.

However, Line Construction reportedly self-corrected the issue by paying the full amount of delay interest after the FTC investigation began.

Furthermore, the violated amount accounted for only 0.2% of the subcontract payments during that period.

According to the Rules on the Operation of Meetings and Case Procedures of the Fair Trade Commission, voluntary correction or a violation amount ratio of 10% or less typically warrants a warning measure.

Nevertheless, the FTC explained that it imposed a corrective order to prevent future recurrences, considering that the number of victimized subcontractors was not small and the scale of the unpaid amount itself was substantial.

Previously, the FTC signed mutual growth agreements with 30 mid-sized construction companies, and Line Construction was one of the participating firms.

An FTC official explained, "This incident occurred before the mutual growth agreement was signed, and Line Construction entered into the agreement to prevent similar occurrences in the future."

(Photo provided by the Fair Trade Commission, Yonhap News)

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