Busan Transportation Corporation Loses First Trial Over Subway Construction Collusion Compensation Claim Against Construction Companies

Claim of over 15.6 billion KRW against 6 companies including Hyundai Construction
Court "Insufficient data analysis" dismisses case

Train waiting at Nopo Vehicle Base of Busan Transportation Corporation in Geumjeong-gu, Busan [Image source=Yonhap News]

[Asia Economy Reporter Seongpil Cho] Busan Transportation Corporation lost a damages claim lawsuit against major construction companies involved in bid-rigging for the Busan Subway Line 1 extension construction project.

According to the legal community on the 15th, the Seoul Central District Court Civil Division 30 (Presiding Judge Han Seong-su) ruled against the plaintiff in the lawsuit filed by the corporation demanding over 15.6 billion KRW from six large construction companies including Hyundai Engineering & Construction, Daewoo Engineering & Construction, and SK Engineering & Construction. The court stated, "There is no evidence to recognize that the plaintiff suffered damages to the extent claimed due to the defendants' collusion."

Previously, Hyundai Engineering & Construction and others were caught by the Fair Trade Commission for bid-rigging in the 2014 Busan Subway Line 1 extension project. It was investigated that in December 2008, these companies set up dummy bidders for the bids on sections 1, 2, and 4 announced by the corporation, colluding on design quality and bid prices to win contracts at inflated costs. The ordering party, the corporation, filed this lawsuit claiming damages caused by the collusion of these construction companies.

The corporation argued, based on the appraiser's evaluation, that these companies won the bids at higher construction costs than in normal competitive bidding. The average damage amounts assessed by the appraiser were 2.3 billion KRW for section 1, 5.9 billion KRW for section 2, and 5.8 billion KRW for section 4. Considering factors such as price fluctuations, the corporation claimed a total damage amount of approximately 15.697 billion KRW.

However, the court dismissed the corporation's claim, judging that the data used by the appraiser for comparison was insufficient. The court stated, "The appraiser analyzed only 42 cases, of which only 11 were subway construction bid data," and added, "It is difficult to see that an analysis of sufficient data to ensure the reliability of the results was conducted."

The court also noted that the winning bid rate for section 3, where no collusion occurred, did not significantly differ from sections 1, 2, and 4. The bid-to-budget ratios at the time of bidding were ▲section 1: 97.85% ▲section 2: 94.37% ▲section 3: 96.83% ▲section 4: 93.97%. The court ruled, "Despite similar bidding periods and conditions, the winning bid rates for sections 2 and 4 were actually lower than for section 3," concluding, "It cannot be definitively stated that the plaintiff suffered damages."

Meanwhile, Hyundai Engineering & Construction, Hanjin Heavy Industries, and Kolon Global, which won bids for sections 1, 2, and 4 respectively, were prosecuted for violating the Fair Trade Act and were fined between 60 million and 70 million KRW by the Supreme Court in 2015. Daewoo Engineering & Construction, Kumho Industrial, and SK Engineering & Construction, which acted as dummy bidders during the bidding process, received corrective orders and fines from the Fair Trade Commission.

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