Fair Trade Commission "Hyosung Heavy Industries and Hanwha Systems Colluded in Bidding for Electrical Communication Facility Construction... Corrective Order and 438 Million KRW Fine"

[Sejong=Asia Economy Reporter Joo Sang-don] The Korea Fair Trade Commission (KFTC) announced on the 22nd that it has decided to impose corrective orders (prohibition of future acts) and a total fine of 438 million KRW on two companies, Hyosung Heavy Industries and Hanwha Systems, for colluding on the bid price and designating the winning bidder and dummy bidders in the bid for the electric and telecommunication facilities construction at the Daegu Dyeing Industrial Complex conducted by the Daegu Dyeing Industrial Complex Management Corporation.

According to the KFTC, Hyosung Heavy Industries and Hanwha Systems agreed and executed the designation of the winning bidder, dummy bidders, and bid prices in the bid held on August 11, 2016, for the selection of contractors for the electric and telecommunication facilities construction at the Daegu Dyeing Industrial Complex. At the time of the incident, the participants were Hyosung and the former Hanwha S&C, which were later split into Hyosung Heavy Industries and merged into Hanwha Systems, respectively.

Hyosung Heavy Industries agreed to win the bid, and Hanwha Systems agreed to participate as a dummy bidder by submitting a higher bid price than Hyosung Heavy Industries. They participated in the bid as agreed, resulting in Hyosung Heavy Industries winning the contract. During the bidding process, Hyosung Heavy Industries supported Hanwha Systems, the dummy bidder, from preparing bid documents to forming a consortium (with local Daegu companies).

A KFTC official stated, "This is the first case where the KFTC has imposed fines for bid rigging in bids issued by industrial complex management corporations operated by the private sector, and it is expected to serve as a warning against collusion practices in the private sector industrial complex bid market." The official added, "The KFTC will continue to strengthen monitoring of bid rigging in construction projects that cause cost increases in the private sector and will respond strictly if such acts are detected."