January 27/2005
Japan Fair Trade Commission
After Having an investigation, the Fair Trade Commission today issued the following recommendation to Hashimoto Forming Industry Company Limited (“Hashimoto Forming”) pursuant to the provisions in Subsection 2, Section 7 of the Actagainst Delay in Payment of Subcontract Proceeds, etc. to Subcontractors, based on its violation of the provisions in Item 3, Subsection 1, Section 4 of the said Act (prohibition on reduction of the amount of subcontract proceeds).
Hashimoto Forming committed the aforementioned violation repeatedly.
1. Summary of Recommendation, etc.
(1) Summary of violation
Hashimoto Forming entrust all or part of the production of car parts that it sells to its subcontractors. As part of its cost cutting effort, Hashimoto Forming retroactively applied new lower unit prices to those components that were delivered by subcontractors, even though the parts were ordered prior to the date of agreement on the price cut. In this way, Hashimoto Forming deducted the amount equivalent to the difference between the old unit price and the new one from the subcontract payment and paid them a lower amount than originally agreed on at the time of delivery, without any grounds attributable to any such subcontractor.
(2) Summary of recommendation
a. Hashimoto Forming shall immediately pay its 17 subcontractors a total amount of 6,109,374 yen, which was deducted from the subcontract payment from September 2003 to September 2004 by retroactively applying new unit prices.
b. Hashimoto Forming shall notify its subcontractors that it will never reduce the subcontract payment in the absence of any grounds attributable to them,and it shall take necessary measure to improve its internal system and ensure that its officers and employees fully aware of the measure.
*Every announcement is tentative translation. Please refer to the original text written in Japanese.
