[Issue] School Uniform Collusion in Gwangju Persists for a Decade... Will It Finally End This Year?

29 Individuals Fined 3?12 Million Won Three Years Ago
Suspected Collusion Continues at 12 Schools This Year
Court Points to Structural Flaws in Purchasing System

Price Hikes Not Reflected... Companies Forced to Close
Fair Trade Commission to Review Case on March 6
Education Ministry and City Office Launch Comprehensive Investigation

A parent is choosing a school uniform at the Nanum School Uniform Store in Songpa-gu, Seoul. Photo by Yonhap News

In the Gwangju region, a lowest-price bidding system through the "school-led purchasing system" has been implemented to reduce the high cost of school uniforms. However, suspicions have been raised that school uniform companies have been engaging in collusion for over 10 years by exploiting this system. Despite past cases where collusion among companies was uncovered, such suspicions persist, prompting calls to address the structural problems of the "school-led purchasing system."

Collusion Among School Uniform Companies Persists Despite Fines Three Years Ago

According to the Gwangju District Prosecutors' Office and other sources on March 3, a comprehensive investigation into school uniform bidding results in the Gwangju region from 2021 to early 2023 revealed price collusion among companies. School uniform shop owners predetermined which schools each would win; when a school posted a bid notice, the designated bidder and the "dummy" companies would share their bids in advance.

The winning bidders at that time would submit prices only 1,000 to 2,000 won lower than the dummy companies to secure the contract. During this process, companies that did not participate in the collusion were pressured to forgo bidding.

Through these methods, 289 out of 387 competitive bidding cases at 147 middle and high schools during the period were awarded at high prices due to collusion. Effectively, collusion occurred at most schools, resulting in students paying more than 60,000 won extra per person for their uniforms annually.

In April 2023, the Gwangju District Prosecutors' Office prosecuted, without detention, 31 school uniform shop owners from 45 uniform supply and sales companies, including a 63-year-old surnamed C, on charges of violating the Monopoly Regulation and Fair Trade Act and interfering with bidding. Of these, 29 uniform shop owners were sentenced in December that year by the Gwangju District Court (Criminal Division 7, Chief Judge Jeon Ilho) to fines ranging from 3 million to 12 million won for bid rigging and violating the Monopoly Regulation and Fair Trade Act.

Despite being fined three years ago, suspicions of continued collusion remain.

According to the "2026 School Uniform Bidding Status for Middle and High Schools in Gwangju" report released by the educational civil society group "Citizens' Group for a Society Without Academic Cliques," there were 12 schools (8 high schools and 4 middle schools) where the successful bidder's bid rate exceeded 90%. The bid rate is the ratio of the bid amount to the estimated price, and a higher figure means the winning bid was close to the estimated price. In other words, this indicates insufficient price competition and suggests the possibility of collusion.

Over 10 Years of Uniform Collusion... Court Cites Structural Issues as Reason for Sentencing

The court detailed the reasons and background that led the defendants to commit these offenses.

The school uniform school-led purchasing system, introduced in the 2015 academic year, follows these procedures: bid (purchase) notice, application for participation (online bidding via the Public Procurement Service's Nara Marketplace and submission of proposals to schools), product explanation session, screening for eligibility by the school uniform selection committee and opening of bids for eligible companies, selection of the lowest price below the estimated price, determination of the successful bidder, and contract signing.

Each metropolitan and provincial office of education sets its own upper limit for uniform prices based on the recommended price presented by the Ministry of Education, taking into account the previous recommended price and the rate of consumer price increases. However, the Ministry of Education's recommended price for school uniforms increased by only about 1% annually from 2015 to 2022. School uniform companies requested increases in the price ceiling, citing the unique characteristics of the school uniform market, such as decreased productivity due to declining student numbers, rising raw material prices, and increased labor costs, but these requests were not properly reflected.

The court also examined structural issues between major brand school uniform companies (franchised shops) and general uniform companies. In the school uniform market for middle and high schools in Gwangju, the four major brand uniform companies (franchised shops) account for about 60% of sales, with the remaining sales going to general uniform companies.

Collusion takes place between the "four major brand uniform companies" and the other general uniform companies. The cost price for branded uniforms is 250,000 to 260,000 won, while for general companies it is 220,000 to 230,000 won, a difference due to commissions paid to the brand headquarters.

Furthermore, most uniform companies must produce 50-60% of the expected volume in advance to meet tight delivery deadlines at the start of the semester. If some students do not purchase uniforms or if there is surplus inventory, this becomes a loss for the uniform companies.

Here, the four major brand uniform headquarters pressure their affiliated shops to maintain existing market shares and provide partial compensation for losses incurred by top-performing shops from low-price bids. As a result, the brand headquarters' policy to maintain sales share has impacted the closures and downsizing of general uniform companies in Gwangju.

Ultimately, due to these structural factors, school uniform companies in the Gwangju region colluded by designating successful bidders in turn and appointing dummy companies to participate in the bidding.

From 2016-2017 by district in Gwangju, uniform companies divided up nearby schools and designated which companies would win, which would act as dummies, and agreed on their bid prices in advance. This collusion continued until 2021. However, starting in 2022, unlike the four major brand uniform companies, general uniform companies expanded their sales area to cover all of Gwangju, thereby broadening the scope of bidding schools. As a result, collusion occurred not on a citywide scale but among a smaller number of companies targeting individual schools.

The court found that this bid collusion was not primarily aimed at generating excessive profits, but rather at minimizing losses caused by excessive competition.

Government and Local Authorities Take Action Against School Uniform Collusion

In the end, as no significant solution to the structural problems was found and suspicions of collusion persisted, the government and local authorities have begun taking enforcement action.

The Fair Trade Commission has announced that it will review the alleged violation of the Fair Trade Act by school uniform businesses in the Gwangju region at a subcommittee meeting on March 6 and has notified relevant parties of the schedule. This case originated from allegations that more than 30 individuals, including major brand uniform shop operators and individual uniform shop owners, predetermined successful bidders in most school uniform purchase tenders for middle and high schools in Gwangju.

The Fair Trade Commission plans to determine whether these individuals engaged in collusion, such as designating successful and dummy bidders in advance for school uniform purchase tenders around 2023. If illegality is confirmed, it will decide on the appropriate sanctions and their severity. The number of initially identified individuals was over 30, but this has decreased somewhat as some business owners have closed down.

The Gwangju Metropolitan Office of Education is also conducting a comprehensive survey of uniform prices to reduce the burden on parents and prevent bid collusion. The Ministry of Education, together with metropolitan and provincial education offices nationwide, will hold a "school uniform system meeting" and conduct a comprehensive survey of uniform prices at each school by March 16.

The city office of education plans to carry out a thorough survey in light of the recent allegations of bid collusion and, if violations of fair trade laws are confirmed, to take strict measures such as criminal prosecution and sanctions against dishonest companies (restrictions on eligibility to participate in bidding).

An official from the Gwangju Metropolitan Office of Education stated, "It is most important to ensure fairness and transparency in the school uniform purchasing process and to reduce the financial burden on parents," adding, "We will do our best to create a fair school uniform purchasing environment by working closely with the Ministry of Education and relevant agencies."

This content was produced with the assistance of AI translation services.