Sebang and 7 Other Companies Collude in POSCO Steel Transport Service Bidding...Fined 40.08 Billion KRW

[Image source=Yonhap News]

[Asia Economy Reporter Moon Chaeseok] Eight businesses, including Sebang, were caught by the Fair Trade Commission for colluding in 19 bids related to the transportation services of steel products ordered by POSCO.

The Fair Trade Commission announced on the 27th that it decided to impose orders to cease illegal activities and a total fine of 40.081 billion KRW on all eight businesses that colluded in 19 bids over 18 years from 2001 to 2018.

The eight businesses are Sebang, Yuseong TNS, CJ Logistics, Dongbang, Seogang Enterprise, Rodex, Dongjin LNS, and Daeyoung Transport. The total sales amount from their collusive activities reached 931.8 billion KRW.

POSCO changed the method of selecting transportation service providers for steel products such as hot-rolled coils and cold-rolled coils from private contracts to a bidding system in 2001. The transportation providers needed to prevent transportation fees from being cut due to fierce competition.

According to the Fair Trade Commission, before participating in the 19 bids for steel product transportation services ordered by POSCO, the eight businesses agreed on volume allocation, the expected winning bidders, and bid prices among themselves.

First, at the branch manager level of the colluding parties, they recognized and agreed on volume allocation ratios based on each company’s transportation capacity, focusing on existing transportation routes.

They also systematically arranged the expected winning bidders, decoys, and bid prices for each bidding section. About a week before the bids, working-level staff gathered to specifically coordinate according to the volume allocation ratios decided at the branch manager level.

To ensure compliance with the agreement, the colluding parties exchanged employees or shared details with each other before the bids concluded.

As a result, in the 19 bids from 2001 to 2018, the expected winning bidders either won the bids or signed private contracts.

The Fair Trade Commission judged that these businesses violated Article 19, Paragraph 1, Subparagraph 3 (volume allocation) and Subparagraph 8 (bid rigging) of the Monopoly Regulation and Fair Trade Act, which prohibit unfair joint acts.

The Fair Trade Commission decided to impose orders to cease illegal activities and fines totaling 40.081 billion KRW on the eight businesses, including Sebang.

A Fair Trade Commission official stated, "This action is significant in that it detected and sanctioned bid rigging where transportation providers maintained collusion over a long period in the transportation service bids for steel products, a national key industry, thereby raising transportation costs. Through this measure, the temptation for collusion in similar transportation service bids ordered by steel manufacturers will be greatly reduced."