Pharmaceutical Companies Accused of Vaccine Bid Rigging Acquitted in Second Trial... First Trial Verdict Overturned

Pharmaceutical and distribution companies and their executives, who were indicted and found guilty in the first trial for price-fixing during the National Immunization Program (NIP) bidding process, were acquitted in the appellate court.

On the 23rd, the Criminal Division 3 of the Seoul High Court (Presiding Judges Lee Chang-hyung, Nam Ki-jung, Yoo Je-min) acquitted SK Discovery, Boryung Biopharma, Green Cross, Yuhan Corporation, Kwangdong Pharmaceutical, GlaxoSmithKline, and seven executives charged with violating the Fair Trade Act and other allegations. In the first trial, the court recognized their guilt and sentenced all defendants to fines.

The court stated, "At the time, the bidding structure required submission of a supply commitment letter to win the bid, and it is difficult to acknowledge the possibility that a third party, other than the joint sellers, could have obtained such a supply commitment letter," adding, "It is hard to see that there was a substantial competitive relationship among the joint sellers, the front companies, and other bidders in the bidding."

It further stated, "The presence or absence of front companies only determined whether the bid would fail due to a single bid or be awarded, and it does not appear to have materially affected other conditions," and added, "It is also difficult to conclude that the defendants’ joint actions influenced or had the potential to influence prices or other transaction conditions."

Regarding the charge of bid rigging, the court judged, "Even if the defendants participated in the bidding by using front companies, it is difficult to see that they caused a state that unfairly affected the formation of appropriate prices through fair and free competition."

On whether there was intent to unfairly restrict competition and rig bids, the court noted, "Officials from the Korea Disease Control and Prevention Agency seemed to have no practical awareness of competition at the time, to the extent that they thought it would be acceptable to proceed with a private contract for vaccines if approved by the Public Procurement Service in 2016," and stated, "It is difficult to prove that the defendants had the intent to unfairly engage in joint actions that restricted practical competition or affected the bid price, thereby undermining the fairness of the bidding."

Green Cross and others were indicted in 2020 on charges of colluding to make excessive profits by setting up front companies while participating in government-ordered bids for vaccines such as the cervical cancer vaccine. The first trial found them guilty and sentenced all to fines. The six pharmaceutical companies, including Green Cross, were fined between 30 million and 70 million KRW, and seven executives from these companies were fined between 3 million and 5 million KRW.