Recommendation over payment cuts: JPY 17.12 million deducted from 16 suppliersA company that later shaved a percentage off the price it had agreed
On October 30, 2026 (Reiwa 8), the Japan Fair Trade Commission (JFTC) announced a recommendation against 株式会社日工 (Nikko). According to the release, the company had subcontracted the manufacture of bolts and similar parts to 16 subcontractors and, between December 2024 and December 2025, deducted a total of JPY 17,128,945 from the subcontract payments by applying a fixed rate to the amounts in order to secure its own profit. It is a useful prompt to review in-house practices on the ordering side.
- Subcontractors affected
- 16
- Period covered
- December 2024 to December 2025
- Method of reduction
- Applying a fixed rate to the payment amount
- Total amount deducted
- JPY 17,128,945
Key points
- According to the release, Nikko subcontracted the manufacture of bolts and similar parts to 16 subcontractors and, between December 2024 and December 2025, deducted a total of JPY 17,128,945 from the subcontract payments by applying a fixed rate to those amounts in order to secure its own profit
- The provision applied was Article 4, Paragraph 1, Item 3 of the Subcontract Act as it stood before amendment (prohibition of reducing subcontract payments). Reducing the payment where the subcontractor is not at fault is itself prohibited
- The recommendation requires the company to confirm, by resolution of its board of directors, that it will not reduce the amount of payments for manufacturing and similar commissions where the small and medium-sized contracted business is not at fault
- The release also states that the full amount of the disadvantage caused has already been paid back
- A recommendation is published together with the company name and head office address, and the release sets out the number of affected suppliers, the period and the amount
What to do in practice
- Check whether the amount on the purchase order matches the amount actually paid, and whether anything is being deducted under names such as handling fees, discounts or cooperation fees
- If there is an in-house practice of applying a fixed rate as a deduction, check case by case whether the subcontractor is actually at fault
- If payment terms are changed, agree them in writing and keep the record
When a large company asks a small factory to make parts, the price is agreed in advance. But one company, after receiving the finished parts, paid less than agreed by taking off a percentage of the price. On October 30 the national competition authority (the JFTC) told it to stop. The amounts taken off came to more than JPY 17 million across 16 business partners, and the company has already paid all of it back.
- 1 OrderAsk the factory to make the parts
- 2 AgreeAgree the price in advance
- 3 ReceiveReceive the finished parts
- 4 PayPay the agreed amount in full
Points
- It paid 16 partners less than agreed by applying a percentage to the agreed price
- The total taken off was JPY 17,128,945, between December 2024 and December 2025
- The authority told the company to confirm at a board meeting that it will not cut prices when the partner has done nothing wrong
What the words mean
- subcontracting
- Making goods or doing work that another company has asked you to do
- recommendation
- A formal instruction from a government body to put something right. The company name is published too
- Japan Fair Trade Commission: Japan Fair Trade Commission, Recommendation against Nikko Co., Ltd. (October 30, 2026)
This article summarizes and explains materials published by government agencies and is not advice on any individual case. Rules can change, so for actual procedures and decisions always check the latest original materials and consult professionals such as tax accountants or labor and social security attorneys. English, Simplified Chinese and Traditional Chinese versions are translations prepared from the Japanese articles for convenience. If anything differs, the Japanese text and the original source take precedence.