Prosecutors Indict Multiple Executives of Major Corporations for 670 Billion Won KEPCO Bid-Rigging Scandal

Four Employees from Hyosung Heavy Industries, Hyundai Electric, LS ELECTRIC, and Iljin Electric Detained and Indicted
At Least 160 Billion Won in Unfair Profits Over Seven Years
Prosecutors: "Public Suffered Damages Such as Higher Electricity Bills"

Eight companies and eleven employees have been indicted en masse for leading a collusion scheme worth approximately 670 billion won during the bidding process for equipment contracts commissioned by Korea Electric Power Corporation.

The Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Na Heeseok) announced on January 20 that four employees from Hyosung Heavy Industries, Hyundai Electric, LS ELECTRIC, and Iljin Electric have been detained and indicted on charges of violating the Fair Trade Act. In accordance with the dual liability principle, the four companies that led the collusion, along with eight participating small and medium-sized enterprises, have also been brought to trial.

According to prosecutors, from March 2015 to September 2022, these individuals are accused of unfairly restricting competition by colluding in advance on the winning bidder and bid prices in 145 bids for gas-insulated switchgear commissioned by KEPCO.

Prosecutors determined that these companies, which account for about 90% of the gas-insulated switchgear market, agreed in advance on which company would win each bid and shared bid prices to secure contracts at high prices. Through this collusion, which totaled 677.6 billion won, they obtained at least 160 billion won in unfair profits.

Prosecutors believe that by maintaining abnormally high winning bid rates (the ratio of the number or amount of contracts actually awarded to the total items or construction projects up for bid) over seven and a half years, the companies drove up contract prices, resulting in higher electricity bills and other damages to the general public.

The four companies that led the collusion had previously been caught multiple times for similar conduct. However, as penalties such as corporate fines were lenient, they once again engaged in long-term, organized collusion.