'Geumgang and Nambu Cooperatives' Colluded in Gansu Ready-Mixed Concrete Purchase Bidding... Fair Trade Commission Issues Corrective Order and Imposes 667 Million KRW Fine

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission announced on the 22nd that it has decided to impose corrective orders (including future conduct prohibition orders and written notification orders of legal violations) and a total fine of 667 million KRW on two ready-mixed concrete manufacturers and sellers, Geumgang Co., Ltd. and Gyeonggi Nambu Remicon Business Cooperative, who colluded on bid quantities in the bid for purchasing pipe water ready-mixed concrete conducted by the Incheon Regional Public Procurement Service.

According to the Fair Trade Commission, the two companies, Geumgang and Nambu Cooperative, agreed in advance on the proportion of ready-mixed concrete quantities each would bid in the three-category bid (Anseong and Pyeongtaek areas in Gyeonggi Province) for pipe water ready-mixed concrete purchase held by the Incheon Regional Public Procurement Service on June 27, 2012, and executed this agreement.

The bid was conducted as a desired quantity competitive bidding method, and these two companies decided in advance that Geumgang would bid 35% and Nambu Cooperative 65% of the total announced quantity, agreeing to bid only the quantities corresponding to those proportions.

In the desired quantity competitive bidding, if participants collude so that the sum of their bid quantities (total bid quantity) matches the total announced quantity, they can avoid competing on bid prices and all colluding businesses will win bids corresponding to their bid quantities.

According to the agreement, Geumgang bid approximately 172,000㎥, about 35% of the total announced quantity, and Nambu Cooperative bid about 320,000㎥, about 65%. Geumgang won 172,000㎥ and Nambu Cooperative won 319,280㎥ respectively.

A Fair Trade Commission official said, "These two companies, which hold 100% market share in this bidding market, eliminated price competition through collusion on bid quantities," adding, "As a result, the winning bid rate was about 99.7%, which is 6.5 percentage points and 8.5 percentage points higher than the 2010 and 2011 bids when these two companies competed."

Accordingly, the Fair Trade Commission decided to impose corrective orders (future conduct prohibition orders) and fines on both Geumgang and Nambu Cooperative. Additionally, a written notification order of legal violations to the member companies of the cooperative, who are the constituent businesses, will be imposed on Nambu Cooperative. The fines imposed are 420 million KRW on Geumgang and 265 million KRW on Nambu Cooperative.

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