JFTC Cracks Down: Suzuki Subsidiary Warned Over "Low-Price" Practices in Violation of Subcontracting Act
The Japan Fair Trade Commission (JFTC) has issued a formal warning to a subsidiary of Suzuki Motor Corporation , citing violations of the Subcontracting Act (Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors). The watchdog's move is part of an intensifying crackdown on large manufacturers exerting undue pressure on smaller suppliers within Japan's automotive ecosystem.
The warning specifically targets "low-price" practices, where the subsidiary is alleged to have unilaterally set unfairly low payment rates for subcontractors, failing to account for rising costs in materials and labor.
The Violation: What Happened?
According to the JFTC, the Suzuki subsidiary engaged in practices that hindered the fair operations of its subcontractors. The core of the violation involves "unjustly low price setting" (Article 4 of the Subcontracting Act).
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Unilateral Price Setting: The subsidiary reportedly set unit prices for parts and processing work at levels that did not reflect current market conditions or the rising costs borne by suppliers.
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Cost-Cutting Pressure: In the automotive industry's drive for "Sho-Sho-Kei-Tan-Bi" (Smaller, Fewer, Lighter, Shorter, Beauty), cost reduction is standard. However, the JFTC found that this specific case crossed the line into illegality by forcing subcontractors to swallow costs that should have been negotiated.
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Recurrence Prevention: The JFTC has not only issued a warning but has also mandated that the subsidiary implement a recurrence prevention plan . This includes reimbursing affected subcontractors for the difference between the paid amount and a fair calculated price, and overhauling their procurement compliance systems.
The Subcontracting Act: A Shield for Suppliers
Japan's Subcontracting Act (often called Shita-uke Ho ) is designed to protect small and medium-sized enterprises (SMEs) from the overwhelming bargaining power of large parent companies.
In 2024 and 2025, the JFTC has been particularly aggressive in enforcing this act. The automotive sector, known for its strict "Just-In-Time" delivery and rigorous cost management, has been under a microscope.
Common Violations in the Auto Industry:
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"Cost Down" Demands: Demanding price reductions (CD) at regular intervals without valid justification.
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Mold Storage Fees: Forcing suppliers to store heavy molds and jigs for free (a practice Nissan was also warned about earlier in 2025).
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Retroactive Discounts: Changing the agreed price after the work has been delivered.
A Pattern in the Industry
This warning to a Suzuki subsidiary is not an isolated incident. It follows a string of regulatory actions against major Japanese automakers and their affiliates.
Industry Context: In March 2025, Nissan Motor Co. received a similar recommendation regarding its treatment of suppliers, specifically related to unilateral reduction of payments. The JFTC is sending a clear message: The era of squeezing the bottom of the supply chain to boost the profitability of the top is ending.
What This Means for Suzuki
For Suzuki, a company that prides itself on efficiency and lean manufacturing, this warning is a significant reputational hurdle.
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Compliance Overhaul: The group will likely need to retrain its procurement officers to ensure "fair trade" takes precedence over aggressive cost targets.
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Supplier Relations: Suzuki must work to rebuild trust with its Tier 2 and Tier 3 suppliers, ensuring that "partnerships" are profitable for both sides.
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Financial Impact: While the immediate fines (or reimbursement costs) may be manageable, the long-term cost of compliance and higher procurement prices could impact margins.
Conclusion
The JFTC's warning to the Suzuki subsidiary serves as a stark reminder to the entire automotive industry. As material and energy costs remain volatile, the burden cannot be shifted entirely to smaller subcontractors. For
readers and industry watchers, this is a signal that fair trade compliance is now just as critical as horsepower and fuel efficiency.