Lack of Clarity in Selection of Business Partners
Basic Principles
- 1. In business relations with business partners, laws on fair transaction must be strictly observed.
- 2. The best supplier should be selected based on fair and clear principles. Such principles must be observed in all transactions, not only contracts of large purchases but also simple service contracts.
- 3. Any limitation or adjustment in terms and conditions of business regarding the business partners must progress with appropriate reasons and clear procedures.
- 4. There must not exist inequality, unfair treatment or unfriendly business transactions using superior position in business relations.
Guidelines for Procedures
You may see details clicking or tapping each item.
-
1. Allowance of Unfair Opportunities
Classification Examples Basic Principle(s) Remarks Refusal of Transaction Refusal and divestment of opportunity in business participation without just reasons Regulations Observed Limitation in Participation Setting up exclusive terms and conditions of business, selecting business regions without basis, limitation on business partners Regulations Observed Discrimination - - Discrimination in price, discriminative application of terms and conditions of business, group discrimination through conference
- - Allowance of preferential treatment on specific companies (high prime cost, terms and conditions of business, etc.)
Regulations Observed -
2. Unfair Transaction Acts
Classification Examples Basic Principle(s) Remarks Unfair Transaction - - One-sided adjustment in supply quantity, unfair purchase at low cost, one-sided alteration of contract conditions, intentional delay in bill payment, one-sided stoppage in transaction for unfair reasons
- - Unfair purchase at high price just from specific companies
Prohibited Observe procedures that have been agreed upon with business partner when reasons to change terms and conditions of business occur Unfair Support Unfair support in fund, human power and assets Prohibited Business Obstruction Unfair use of technology, unfair employment of human resources of cooperative companies, business obstruction with companies in competition, obstruction in other business activities Prohibited -
3. Information Leaking of Supply Company
Classification Examples Basic Principle(s) Remarks Information Leakage Leaking of information acquired from cooperative companies Prohibited
1. Basic Principles
- (1) In business relations with business partners, laws on fair transaction must be strictly observed.
- (2) The best supplier should be selected based on fair and clear principles. Such principles must be observed in all transactions, not only contracts of large purchases but also simple service contracts.
- (3) Any limitation or adjustment in terms and conditions of business regarding the business partners must progress with appropriate reasons and clear procedures.
- (4) There must not exist inequality, unfair treatment or unfriendly business transactions using superior position in business relations.
Basic types of unfair relations with business partners are as follows and include all unfair transactions under the laws in regards to other fair transactions- - Allowance of unfair opportunities
- - Unfair transaction acts
- - Information leakage of supply companies
2. Applicable Parties of Code of Ethics for Fair Transaction and Violation Possibility of Code of Ethics
-
(1) Applicable Parties of Code of Ethics in relation to Fair Transaction
- - Members of purchasing department that directly purchase/service goods necessary by LG and entrusted members of ordering department in charge of corresponding duties
- - Employees executing such duties of storing (inputting), inspecting, paying bills of purchased goods in relation to purchase/service affairs
- - Employees executing duties such as research development that directly affect the selection of specific items to purchase
- - All employees having direct or indirect relation to other duties related to purchasing goods
-
(2) Violation Possibility of Code of Ethics
Transaction regulations and fair procedures must be observed in business affairs with business partners as clearly written and any violation without logical explanation is considered as violation of code of ethics. Moreover, exercising influence on interested parties through a related department even when such duties have no direct relation to purchasing is also considered a serious violation of code of ethics.
3. Allowance of Unfair Opportunities
A. Applicable Deeds and Standard of Judgment
| Classification | Examples | Basic Principle(s) | Remarks |
|---|---|---|---|
| Refusal of Transaction | Refusal and divestment of opportunity in business participation without just reasons | Regulations Observed | |
| Limitation in Participation | Setting up exclusive terms and conditions of business, selecting business regions without basis, limitation on business partners | Regulations Observed | |
| Discrimination |
|
Regulations Observed |
B. Guidelines for Procedures
- (1) Employees positioned to influence decisions on selection and evaluation of business partners must never use or attempt to exercise their influence either to allow preferential treatment or to discriminate against any specific company.
- (2) Employees must give fair opportunities and conditions to business partners in accordance with regulations and procedures of LG. Employees must not only refrain from any type of unfair transactions prohibited by laws related to fair transaction but also must not carry out unjust deeds that violate company regulations.
- (3) Employees must secure sufficient reasons to limit business relations with any business partners and must avoid the following to refrain from intentionally giving opportunities to a specific business partner:
- - Transaction Refusal : Refusing transaction without specific reasons such as legal problem, or any othe disqualification against company regulations for participation requirements.
- - Limitation in Participation : To select a specific business partner or to exclude an unwelcome company :
- - Exclusively selecting terms and conditions of business such as price, quality, etc.
- Limiting transaction regions without any understandable basis- - Limiting transaction partners with unclear reasons
- - Discrimination : To give preferential treatment for a preferred company or to give disadvantage to an unwelcome company :
- - Applying supply prices unfairly or applying different conditions for quality
- Adjusting transaction quantities in advance or setting priority order for transaction relations- - Especially protecting the existing company without any upgrade in the existing company's competitiveness, preferential treatment of retirees at related companies and preferring relations acquired through other education/acquaintance
- (4) When reasons occur to limit business relations with business partners under unavoidable circumstances, employees must report such reasons to the head manager and executive and acquire an approval in accordance with procedures set by the company.
4. Unfair Transaction Acts
A. Applicable Deeds and Standard of Judgment
| Classification | Examples | Basic Principle(s) | Remarks |
|---|---|---|---|
| Unfair Transaction |
|
Prohibited | Observe procedures that have been agreed upon with business partner when reasons to change terms and conditions of business occur |
| Unfair Support | Unfair support in fund, human power and assets | Prohibited | |
| Business Obstruction | Unfair use of technology, unfair employment of human resources of cooperative companies, business obstruction with companies in competition, obstruction in other business activities | Prohibited |
B. Guidelines for Procedures
- (1) Basic principle of coexistence through companionship with business partners in business relation must be observed and employees must refrain from unilaterally adjusting business relations or causing damage to specific business partners by intentionally giving disadvantages, all for the purpose of company's profit.
- (2) Employees positioned to influence decisions on selection and evaluation of business partners must not use or attempt to exercise their influence either to allow preferential treatment or to discriminate against any specific company.
- (3) Employees must give fair opportunities and conditions to business partners in accordance with regulations and procedures of LG. Employees must not only refrain from any type of unfair transactions prohibited by laws related to fair transaction but also must not conduct unjust behaviors that violate company regulations.
- (4) Employees must secure sufficient reasons to modify terms and conditions of business with business partners under unavoidable circumstances and must not unilaterally breach conditions of contract or intentionally execute the following without mutual agreement or consultation with business partners.
- Unfair Transaction : Unilaterally adjusting terms and conditions of business without prior consultation when reasons to modify conditions of contract within contracted period occur :
- - Unilaterally demanding reduction in unit cost of supply
- - Unilaterally adjusting supply amount with notification
- - Demanding unilateral modification in detail matters of contract
- - Intentionally delaying bill payment
- - Unilaterally stopping transactions during contracted period of time without any just reasons
- Unfair Support : Unfair support for the purpose of securing superiority in competitiveness for specific business partners :
- - Supporting fund or human power to specific companies without just reasons
- - Moving company's facility assets or leasing at low price or at free of charge without just reasons or clear procedures
- Business Obstruction : Executing the following either intentionally or without prior consultation with business partners :
- - Unfairly using technology of business partners
- - Unfairly employing human resources of business partners
- - Intentionally obstructing business with companies in competitive relation
- - Intentionally obstructing other business activities to cause disadvantages to business partners
- Unfair Transaction : Unilaterally adjusting terms and conditions of business without prior consultation when reasons to modify conditions of contract within contracted period occur :
- (5) When reasons occur to modify terms and conditions of business with business partners under unavoidable circumstances, employees must report such reasons to the discretionary authority and acquire an approval in accordance with procedures set by the company. Moreover, consultation with business partners in relation must be processed on basis of such modification if necessary.
5. Information Leaking of Supply Company
A. Applicable Deeds and Standard of Judgment
| Classification | Examples | Basic Principle(s) | Remarks |
|---|---|---|---|
| Information Leakage | Leaking of information acquired from cooperative companies | Prohibited |
B. Guidelines for Procedures
- (1) All information of supply companies provided for the purpose of business relations must not be exposed to the outside without approval from representatives of supply companies.
- (2) Specifically, employees must refrain from causing damages in the business activities of corresponding company or outflow of their top employees by leaking information to companies in competition with the corresponding company.