CJ Logistics, Hanjin, and 5 Other Companies Collude in POSCO Steel Material Bidding... Fined 46.04 Billion KRW

Fair Trade Commission Sanctions 7 Companies for Bid Rigging in Transportation Services of Steel Products Produced at Pohang Steelworks

Pohang Steelworks. (Photo by Asia Economy DB)

[Asia Economy Reporter Moon Chaeseok] Seven operators, including CJ Logistics and Hanjin, were caught by the Korea Fair Trade Commission (KFTC) for colluding to fix the winning bid volume ratios and bid prices in POSCO's steel material tenders over 18 years. The KFTC decided to issue corrective orders and impose fines totaling 46.041 billion KRW on the seven operators.

The seven companies involved in the collusion were CJ Logistics, Hanjin, Samil, Dongbang, Cheonil Jeonggi Freight Automobile, Cheonil TLS, and Haedong Enterprise. From 2001 to 2018, these companies predetermined the proportion of winning bids each would receive in POSCO's tenders for steel transportation services, including hot coils, thick plates, and wire rods, and arbitrarily decided the winning bidders in 3,796 tenders. They jointly determined the bid prices as agreed.

Source=Korea Fair Trade Commission

The collusion began when POSCO started selecting transportation service providers for steel products manufactured at the Pohang Steelworks through competitive bidding from 2001. The seven companies colluded from the first tender in 2001 to maintain their transportation volumes at previous levels while securing contracts at higher prices.

They formed a transportation company consortium in 2001 and regularly met to jointly decide the expected winning bidders and bid prices for each tender. To ensure the predetermined transportation volume ratios for each company were maintained as much as possible, they held meetings where Excel screens were projected using beam projectors in the conference room during each tender. Through this collusion in 3,796 cases, they achieved an average winning bid rate of 97%, which was 4 percentage points higher than the 93% average winning bid rate after they stopped colluding.

Source=Korea Fair Trade Commission

The KFTC judged that these companies violated Article 19, Paragraph 1, Subparagraph 3 ('allocation of quantities') and Subparagraph 8 ('bid rigging') of the Fair Trade Act, and decided to impose corrective orders and fines totaling 46.041 billion KRW.

Source=Korea Fair Trade Commission

Moon Jaeho, Head of the Cartel Division at the KFTC, stated, "This action is significant in that it detected and severely punished collusion that had been secretly maintained for a long time in the steel transportation service market, preventing such collusion from recurring." He added, "Since the entities involved are leading logistics companies in Korea, this will contribute significantly to preventing collusion that may occur in other transportation markets beyond the steel transportation market, thereby reducing transportation costs, which are a major cost factor in various industries."

He continued, "The KFTC plans to provide guidance materials to related industries and conduct thorough market inspections to prevent collusion in public and private sector tenders going forward."

General status of 7 businesses involved in collusion. (Data from the Fair Trade Commission)

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