Steel Industry Faces 260 Billion Won Collusion Fine... "Will Submit Objections and Explanations"

Allegations of Pre-Bidding Collusion in Public Procurement Service Rebar Tender
Large-Scale Fine Imposed Following 2018 Case

[Asia Economy Reporter Oh Hyung-gil] Steel manufacturers are reviewing administrative procedures such as filing objections against the imposition of a 250 billion KRW fine for bid-rigging on rebar. However, as concrete evidence of collusion has emerged and prosecution has followed, they are struggling over how to respond.

According to the steel industry on the 12th, the Fair Trade Commission imposed corrective orders and a total fine of 256.5 billion KRW on seven steel manufacturers and four rolling companies who pre-allocated quantities and agreed on bid prices during the annual unit price contract bidding process for rebar regularly ordered by the Public Procurement Service from 2012 to 2018.

The fines by company are as follows: Hyundai Steel 86.613 billion KRW, Dongkuk Steel 46.07 billion KRW, Daehan Steel 29.04 billion KRW, Korea Steel 31.83 billion KRW, YK Steel 23.653 billion KRW, Hwanyeong Steel Industry 20.67 billion KRW, and Korea Steelworks 16.344 billion KRW.

The Public Procurement Service conducts rebar bidding for use by local governments and other public institutions on a one- or two-year basis. The contract volume ranges from 1.03 million tons to 1.5 million tons, worth approximately 950 billion KRW.

The Fair Trade Commission found that during this government procurement rebar bidding process, rebar manufacturers pre-agreed on the quantities to be awarded and bid prices. After the bidding announcement, steel manufacturers’ bidding managers first met to negotiate quantity allocation, and on the day price data was submitted to the Public Procurement Service, they also met with the rolling companies’ bidding managers to finalize the awarded quantities by company.

However, the steel manufacturers expressed surprise at the Fair Trade Commission’s decision.

A representative from a steel manufacturer said, "Since we have differing opinions on the Fair Trade Commission’s judgment, we will analyze the decision and proceed with filing objections." Another company official said, "We will carefully review the contents as soon as we receive the resolution and respond accordingly. Whether to pursue administrative litigation has not yet been decided."

They view government procurement rebar prices as generally determined at around 95% of private sector rebar prices, considering it a public-interest project in which companies participate despite losses. They argue that collusion inevitably occurs to minimize losses.

In 2018, the Fair Trade Commission also imposed large fines on steel manufacturers for rebar collusion. At that time, six companies including Dongkuk Steel, Hyundai Steel, Korea Steel, Daehan Steel, Hwanyeong Steel, and YK Steel were found to have colluded on rebar distribution prices, receiving corrective orders and fines totaling 119.4 billion KRW, and were referred to prosecution. The steel manufacturers filed administrative lawsuits claiming the collusion was unfair but lost the case.