'Bid Rigging' by 11 Rebar Companies, Up to 2 Years Bid Restriction

[Asia Economy (Daejeon) Reporter Jeong Il-woong] The Public Procurement Service announced on the 26th that it has imposed restrictions on bidding participation qualifications on 11 companies that colluded in the competitive bidding for the annual unit price contract of deformed steel bars for reinforced concrete (hereinafter referred to as rebar).

Due to the bidding restrictions, 2 companies will be barred from participating in all public bids issued by national institutions and local governments for 24 months, and 9 companies for 6 months.

According to the investigation by the Fair Trade Commission, these companies, as rebar manufacturers, colluded in advance on the winning quantities and bid prices in the annual unit price contract bidding for rebar from 2012 to 2018, thereby restricting competition.

The annual unit price contract bidding for desired quantities is a bidding method used when purchasing large quantities of goods that are difficult or impossible to supply by a single entity's capacity or production facilities.

Bidders submit their desired contract quantities and unit prices, and the winner is determined starting from the bidder who offers the lowest price until the announced quantity is reached.

However, the 11 companies caught colluding undermined fair bidding competition. Accordingly, the Public Procurement Service plans to pursue joint damages lawsuits against the colluding companies in addition to restricting their bidding participation qualifications. The lawsuit will be conducted by gathering about 1,380 demand institutions that suffered damages from the collusion.

Furthermore, to prevent collusion among companies in government rebar bids, the agency plans to improve bidding and contract systems, including switching and applying a multiple supplier contract method.

The prosecution, recognizing the seriousness of the bid-rigging case, arrested and indicted 3 related individuals in December last year and indicted 26 people, including 7 corporations, without detention.

Lee Jong-wook, Administrator of the Public Procurement Service, said, “The Public Procurement Service will strictly respond to collusion among companies according to relevant laws and regulations,” and added, “We will also improve bidding and contract systems to eradicate collusion in the government rebar market.”