Court Orders KT to Pay 1.2 Billion Won for Leading Public Institution Bid Rigging... KISTI Wins Case

Related 9 Lawsuits... Largest Litigation Amount

A court ruling has ordered KT, which led collusion in a public sector dedicated line project bid commissioned by a public institution, to compensate the Korea Institute of Science and Technology Information (KISTI) over 1.2 billion won.

KT Headquarters. Photo by Yongjun Cho jun21@

According to the legal community on the 23rd, the Seoul Central District Court Civil Division 21 (Presiding Judge Kim Ji-hye) ruled in a lawsuit filed by KISTI against KT for damages, ordering “KT to pay KISTI 1.228 billion won plus related delayed interest.”

Previously, in 2015, during the bidding process for the construction and operation of a network connecting KISTI and 16 universities and research institutions nationwide, KT colluded in a bid-rigging scheme by ensuring SK Broadband and LG Uplus did not participate in the bid so that KT could secure a private contract, paying approximately 3.6 billion won as compensation. Through this, KT secured a sole contract worth about 12 billion won.

Subsequently, it was revealed that KT, SK Broadband, and LG Uplus colluded in several public sector dedicated line project bids, including this case. The Korea Fair Trade Commission imposed corrective orders and fines totaling about 13.3 billion won in 2019 on these businesses for collusion in public sector dedicated line project bids and reported KT to the prosecution. Following this, KISTI, which suffered damages, filed a lawsuit against KT for damages in 2021.

The court stated, “KT submitted an integrity contract promising to pay 10% of the total contract amount as damages if it engaged in bid-rigging related to the contract, and it was confirmed that KT was fined by the Fair Trade Commission in 2019 for bid-rigging in this case,” thus ruling in favor of KISTI.

On the other hand, KT’s claims were entirely rejected. KT argued, “The system allowing the inclusion of predetermined damages for bid-rigging in integrity contracts submitted by contractors in contracts with the state was implemented on January 1, 2016, but the initial bid announcement was made before this, so the claim for damages is not valid.” However, the court judged, “The purpose of the system is not to prohibit predetermined damages for bids announced before January 1, 2016, based on the parties’ intentions.”

Additionally, the court dismissed KT’s argument that damages should be reduced because KISTI used the dedicated line communication service at a much cheaper rate than general users. The court pointed out, “From November 2015 to February 2016, KT agreed to pay about 3.6 billion won to SK Broadband and LG Uplus as compensation for bid-rigging,” and added, “KT judged that collusion was economically beneficial even after paying such amounts.” The court further stated, “Considering that KISTI likely signed the contract at a considerably high price, it appears to have suffered significant damages.”

Meanwhile, nine government ministries and institutions, including the Ministry of Employment and Labor, the Ministry of Science and ICT, the Korea Meteorological Administration, KISTI, and the Small and Medium Business Corporation, have filed lawsuits over damages caused by telecom companies’ collusion, with total damages amounting to about 7.2 billion won. Among them, KISTI’s lawsuit amount (about 1.2 billion won) is known to be the largest.