Illegal Collusion Among Furniture Companies Exposed Through 'Sadaritagi'... Fair Trade Commission Imposes Heavy Fines

20 Companies Colluded 190 Times in Bids Worth 332.4 Billion KRW

Yonhap News

Twenty furniture companies, including Hanssem, Umami, and Jamat, were fined a total of 18.3 billion KRW for colluding in apartment system furniture bids.

The Korea Fair Trade Commission (KFTC) announced on the 13th that it decided to impose corrective orders and a total fine of 18.3 billion KRW on 20 furniture companies for violating the Fair Trade Act.

The 20 furniture companies include Nexis Design Group, Neps, Dongsungsa, Mizend, Raf System, Space Max, Irex KNP, SNDNG, Youngil Industry, Umami, Umami Furniture, Jamat, JC, Changui International, KD, Combi, Hanssem, Hanssem Nexus, Garim, and Gonggan Krazy.

The KFTC decided to refer four corporations?Hanssem, Dongsungsa, Space Max, and Jamat?to the prosecution, considering the degree of involvement and cooperation during the investigation.

Sales representatives of these companies are suspected of colluding by pre-agreeing on the winning bidders and bid prices in 190 system furniture bids issued by 16 construction companies from February 2012 to November 2022.

They reportedly determined the order of winning bids through methods such as ladder games and drawing lots, then agreed to share profits by having the winning bidder allocate some quantities to participating companies as a cover or by paying cash, leaving documentation of these agreements.

The number of bids won by the colluding businesses was 167 out of 190, with related sales amounting to 332.4 billion KRW. The collusion was found to have caused construction cost increases ranging from 550,000 KRW to 3.5 million KRW depending on the apartment size.

The apartments targeted by the collusion included Olympic Park Foret in Gangdong-gu, Seoul (Dunchon Jugong Reconstruction Apartment), known as the "largest reconstruction project since Dangun."

System furniture refers to furniture made by placing wooden shelves on aluminum pillars, commonly used in dressing rooms.

This is the third case in which the KFTC has detected and penalized bid rigging related to apartment interior construction.

In April last year, the KFTC uncovered bid rigging among 31 companies in built-in special furniture bids and imposed fines totaling 93.1 billion KRW, and in October, it investigated bid rigging among nine companies in system bathroom bids, imposing fines of 6.7 billion KRW.

The KFTC stated, "It is significant that we uncovered collusion that had been practiced as a custom for over 10 years in the system furniture bidding market and corrected illegal activities that contributed to price increases in apartments, which are the homes of the public."