Samsung slapped with fine for unfairly cancelling parts orders

Samsung Electronics has once again found itself on the wrong side of the Korean Fair Trade Commission (FTC).

The watchdog is, this time, after the company following the company’s habit of repeatedly cancelling parts orders to small contractors and not paying for them.  

It’s now decided to fine the company $1.4 million (1.6 billion won) for these unfair practices- the first of its kind to be issued.

According to the FTC, of the 1.5 million parts orders placed by Samsung Electronics between January 2008 and November 2011, two percent – around 28,000 orders – were cancelled.  

Its practices had a knock on effect on its suppliers, which were stuck with huge inventories as well as holes in their pockets.

The FTC said that although tech companies often cancelled orders, Samsung had gone one step too far by “unfairly passing the burden onto its parts suppliers by making them carry inventory for discontinued items.”

It worked out that Samsung tended to cancel orders 59 days after the payment date was due, something that wasn’t common in the tech world.

“Other companies we reviewed were found to have cancelled orders, but never after the payment date,” the FTC said.

Samsung, of course, denies the claims.