Supreme Court Recognizes SK Construction and Samsung C&T's 'Four Major Rivers Collusion'... "Must Return 1.6 Billion KRW to the State"

[Asia Economy Reporter Kim Hyung-min] Major construction companies have been recognized for colluding in the 2009 Four Major Rivers Project bidding in the Supreme Court's final appeal, resulting in their having to return the design compensation fees to the state.

The Supreme Court's First Division (Presiding Justice Park Jung-hwa) announced on the 6th that it upheld the lower court's ruling partially in favor of the plaintiff in the appeal lawsuit filed by the state against SK Construction and Samsung C&T, demanding the return of "unjust enrichment."

The construction companies were suspected of colluding to help Daewoo Construction win the bid for the "Geumgang River Restoration" project, one of the Four Major Rivers Projects, between February and April 2009. The companies were found to have used so-called "dummy bidding" and "price manipulation" tactics. For example, they submitted a so-called B design, which was less complete, at a higher bid price than Daewoo Construction. This deliberately created a competitive structure in which Daewoo Construction was bound to win the bid.

As planned, Daewoo Construction was selected as the successful bidder, and SK Construction received 940 million KRW and Samsung C&T received 670 million KRW as design compensation fees (fees paid to companies that participated in the bidding but lost). The state filed a lawsuit demanding the full return of the design compensation fees, arguing that the construction companies' collusion constituted grounds for invalidating the bid.

Both the first and second trials ruled in favor of the state. The second trial court stated, "Even though Daewoo Construction was the sole bidder, the act of bidding as if there were competitors is considered collusion unless there are special circumstances." The Supreme Court also found no error in this ruling and upheld it as is.