Public Procurement Service Requests Prosecution of 23 Unfair Procurement Companies and Recovery of Illicit Gains

[Asia Economy (Daejeon) Reporter Jeong Il-woong] On the 15th, the Public Procurement Service announced that it had identified 23 companies involved in unfair procurement practices and took measures to request prosecution and recover unjust profits. Among the identified companies, four that violated the Fair Trade Act through collusion were referred to the Fair Trade Commission for prosecution.

Company A and Company B, which manufacture and supply special-purpose vehicles for firefighting and rescue activities, were found to have predetermined the winning bidder and agreed on bid prices during participation in government procurement bids from March 2015 to May 2019, resulting in contracts worth approximately 31.9 billion KRW.

Additionally, two fabric manufacturers are suspected of agreeing on the winning bidders and bid prices for three types of army uniform fabrics during bids in June 2018, fearing reduced profitability due to rising raw material prices of wool, and subsequently concluded contracts worth about 4.6 billion KRW.

The Public Procurement Service decided to recover 200 million KRW in unjust profits from 19 companies caught for unfair procurement practices such as violations of direct production requirements and preferential price maintenance obligations.

The companies violating the direct production standards include 18 firms that supplied parking control devices, pedestrian mats, broadcasting audio equipment, and organic coagulants to demand institutions without directly producing these four items. These companies were ordered to return a total of 149.33 million KRW in unjust profits.

Furthermore, one company that supplied broadcasting audio equipment to the civilian market at prices lower than the contract prices on the Korea ON-line E-Procurement System (KONEPS) comprehensive shopping mall was ordered to return 53.23 million KRW for violating the preferential price maintenance obligation.

Kang Sung-min, Director of the Procurement Management Bureau at the Public Procurement Service, stated, “We sternly warn that procurement companies must bear heavy legal responsibility if they disrupt a fair procurement market,” and added, “The Public Procurement Service will continue to actively respond to unfair trade practices that cause waste of national finances.”