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[Release] Recommendation from the Japan Fair Trade Commission Based on the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors

3/26/2018

Tokyo, March 26, 2018 – SATO Holdings Corporation announced today that subsidiary SATO Printing Co., Ltd. received a recommendation from the Japan Fair Trade Commission (JFTC) under the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors.

The JFTC rendered the recommendation in regards to payments collected by SATO Printing from subcontracted label factories in Japan engaged in the production of label and sticker consumables. Payments were collected for the use of production systems, network communication lines, PCs, barcode readers and scanners, dot matrix printers and laser printers, as well as maintenance service for PCs, dot matrix printers and laser printers. Collection of payment for these services was deemed to be in violation of Japan's Subcontract Act (Article 4 Section 1 Clause iii: “Reducing the amount of subcontract proceeds without reasons attributable to the subcontractor”). The reduced proceeds to the subcontractors between June 2016 and February 2018 amounted to 98.8 million yen.

SATO Printing ceased collection of these payments starting in March 2018 and has returned the reduced proceeds to the label factories as of early March.

The management team at SATO deeply regrets any damage to the trust relationships built with subcontractors and believes the JFTC recommendation to be a matter of grave importance that is dealt with to prevent recurrence. In addition to alerting all employees, SATO will implement an employee training program on the Subcontract Act. The SATO management team is fully committed to strengthening regulatory governance in all areas of operations not only limited to the Subcontract Act and will take all necessary measures to ensure compliance.

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