Gas Gong, 17 Companies Sue for Damages Over Bid Rigging in Distribution Panels and Sanctions on Fraudulent Businesses

"Continuous Monitoring and Revision of Integrity Contract Terms...Prevention of Bid Rigging in Advance"

Korea Gas Corporation Headquarters. (Photo by Korea Gas Corporation)

[Asia Economy Reporter Moon Chaeseok] Korea Gas Corporation announced on the 19th that it will pursue damage compensation lawsuits and sanctions against unfair contractors for 17 companies involved in bid-rigging for distribution panel purchases, which were fined 1.387 billion KRW by the Fair Trade Commission. A distribution panel is a substation device used to supply electricity stably, converting high-voltage electricity supplied from Korea Electric Power Corporation into lower voltage and ratings suitable for equipment ratings to monitor, control, and protect the power system.

The corporation stated that it plans to file damage compensation lawsuits against the 17 companies, including Kyungin Engineering, which were caught by the Fair Trade Commission. Depending on the degree of participation in the collusion, it will impose sanctions restricting bidding participation qualifications for a minimum of 6 months to a maximum of 2 years. These sanctions will be applied according to the Act on Contracts to Which the State is a Party.

The corporation reported that in March 2016, it detected signs of bid-rigging in the distribution panel purchase bids during an internal audit and, after further review, reported it to the Fair Trade Commission in May of the same year. Based on the corporation’s report and submitted materials, the Fair Trade Commission’s investigation revealed that these 17 companies colluded in 15 distribution panel purchase bids from April 2013 to July 2015.

These businesses took advantage of the corporation’s change in the purchase method for replacing old distribution panels in 2013, switching from the existing negotiated contracts to competitive bidding such as "performance-certified product designated competition," to collude. They divided roles by agreeing in advance that if a specific company won the bid, another company would handle product manufacturing, and they prearranged bid amounts and other details.

Separately from the damage compensation lawsuits and designation of unfair contractors, the corporation announced that it is analyzing signs of bid-rigging through a continuous monitoring system. It plans to revise the integrity contract conditions so that the scheduled damage compensation amount exceeds the benefits of collusion. Through this, it aims to eliminate incentives for collusion in advance.

A corporation official said, "We will continue to strengthen internal monitoring of the bidding process," and added, "If collusion is detected, we will take strict measures according to laws and principles and do our best to prevent recurrence."

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