"I'll Write the Price, You Just Submit It"...Surcharge for Bid-Rigging in Sujeong Hanyang Apartment Maintenance Tender in Ansan

Prearranged 2.2 Billion Won Maintenance Contract Exposed
Winning Bid Orchestrated by Directly Sharing Bid Price

In a large-scale maintenance work tender, funded by apartment residents' valuable maintenance fees, companies that had preselected a winning bidder and participated as cover bidders were caught by the Korea Fair Trade Commission (KFTC) and are now subject to surcharge penalties.

Sujeong Hanyang Apartment in Danwon-gu, Ansan-si. Jijiokseon.

On the 24th, the KFTC announced that it had decided to impose corrective orders and a total surcharge of 27 million won on Juwon DNP Co., Ltd. and Irumi Construction Co., Ltd., which colluded to prearrange the winning bidder and cover bidder in the maintenance work tender conducted at Sujeong Hanyang Apartment in Danwon-gu, Ansan-si, Gyeonggi-do.

According to the KFTC, in January 2023 Juwon DNP participated in a tender for exterior wall repainting and rooftop waterproofing work (with a contract amount of approximately 2.2 billion won) ordered by the apartment, and asked its competitor Irumi Construction to act as a cover bidder. The purpose was to avoid low-price orders resulting from the lowest-bid system and to secure the contract with certainty.

Their collusion was carried out meticulously. Juwon DNP predetermined and informed Irumi Construction of the bid price that Irumi Construction should submit, and Irumi Construction submitted its bid at that price as requested. As a result, as planned in advance, Juwon DNP was selected as the final successful bidder and signed a contract worth about 2.2 billion won.

The KFTC determined that these actions violated Article 40(1)8 (bid rigging) of the Monopoly Regulation and Fair Trade Act. Although businesses are supposed to determine prices through free competition, they artificially fixed the winning bidder and the bid price, thereby disrupting fair bidding order.

This measure is significant in that it uncovered an entrenched practice of collusion in the maintenance work market, which is directly connected to the maintenance fee burden of apartment residents. Bid rigging ultimately leads to inflated construction costs, which in turn becomes a direct factor driving up residents' maintenance fees.

The KFTC stated, "We will continue to monitor bid-rigging practices in areas that have a close impact on people's daily lives, such as apartment maintenance work," adding, "Going forward, we plan to take strict action whenever violations of the law are detected in bid-rigging cases in livelihood-related sectors that are closely tied to the public's everyday life."