Prosecutors Indict Leading Company in Nara Market GRP Complex Hall Bid Rigging... First Case Applying Leniency Program

First Case of Criminal Leniency Application for Corporate Penalty Reduction System

Seoul Central District Prosecutors' Office, Seocho-dong, Seoul. / Photo by Seokjin Choi

[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] The prosecution indicted a company that led bid-rigging hundreds of times in the Korea ON-line E-Procurement System (KONEPS) comprehensive shopping mall, while companies that applied for leniency (self-reporting discount system) were not prosecuted. This is the first case since the implementation of the "Guidelines on Penal Reduction and Investigation Procedures for Cartel Cases" in December last year.

The Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Ko Jin-won) announced on the 30th that it has indicted Company A without detention on charges of violating the Fair Trade Act for prearranging the winning bidder and bid prices with competitors during the "Multiple Supplier Contract Stage 2 Competition" process related to GRP (Glass Reinforced Plastic) composite pipes and manholes in the Public Procurement Service's "KONEPS comprehensive shopping mall."

A multiple supplier contract refers to a unit price contract concluded by the head of the Public Procurement Service with two or more contractors so that the demand agency can select from types of demand materials with the same or similar quality, performance, and efficiency.

The leniency system is a system that exempts or reduces criminal punishment for companies that voluntarily report cartel activities.

Article 12 of the "Guidelines on Penal Reduction and Investigation Procedures for Cartel Cases," established at the end of last year, stipulates that the first-priority applicant for penal reduction shall not be prosecuted, and the second-priority applicant shall receive a 50% reduction in sentencing.

According to the prosecution, Executive Director B of Company A, a manufacturer of GRP composite pipes and manholes, is suspected of prearranging the winning bidder and bid prices a total of 359 times with competitors such as Company C and Company D during the "Multiple Supplier Contract Stage 2 Competition" process in the "KONEPS comprehensive shopping mall" from March 2012 to October 2018. It was investigated that the contract amount rigged by Company A with competitors in this manner reached 62.9 billion KRW.

The Supreme Prosecutors' Office signed an agreement with the Public Procurement Service in January 2018 to eradicate corruption in public bidding and establish fair trade order.

Accordingly, in July of the same year, the Supreme Prosecutors' Office received suspicious bid-rigging data related to Company A and others from the Public Procurement Service and launched an investigation.

Competitors and their executives applied for penal reduction to the Supreme Prosecutors' Office in February this year and were able to avoid criminal punishment.

A representative from the Central District Prosecutors' Office said, "This is the first case of not prosecuting a criminal leniency applicant who sincerely cooperated with the investigation under the 'Guidelines on Penal Reduction and Investigation Procedures for Cartel Cases' implemented from December 10 last year."

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