Fair Trade Commission "8 Companies Including Altechnometal and Sejinmetal Colluded in Bidding... Corrective Orders and Fines"

Collusion in Aluminum Alloy Product Purchase Bidding Ordered by Hyundai Motor and Others
Hyundai and Kia to Implement Improved Bidding System from Next Year to Prevent Recurrence of Collusion

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission announced on the 8th that it has decided to impose corrective orders and a total fine of 20.671 billion KRW on eight companies that colluded on bid prices in the aluminum alloy product purchase bidding conducted by Hyundai Motor and others.

According to the Fair Trade Commission, the eight companies?Altechno Metal, Sejin Metal, Hanyung Metal, Dongnam, Wooshin Metal, Sambo Industry, Korea Refractory, and Dawon Alloy?participated in aluminum alloy product purchase bids conducted by Hyundai Motor, Kia, and Hyundai Transys from 2011 to 2021. They pre-arranged volume allocations and jointly decided the expected winning order and bid prices accordingly.

These companies continued collusion until the bid in December 2016 but stopped in February 2017 when the prosecution began investigating bid-rigging charges. However, as their corporate profits worsened, they resumed collusion starting from the September 2019 bid.

The eight companies met the day before the bid to allocate Hyundai Motor’s total order volume evenly among themselves and jointly decided the expected winning order and bid prices per item according to the agreed volume allocation. As a result, from 2011 to 2021, the winning bidders and bid prices were determined as agreed, allowing the eight companies to secure supply volumes at high prices in every bid without any failures.

The Fair Trade Commission viewed the unique characteristics of Hyundai and Kia’s bidding system as one of the backgrounds for the collusion. Multiple companies are selected as winning bidders per item, and the supply price is set as the lowest bid price among the winning bidders, which is uniformly applied to all winners. This created an incentive for suppliers to agree on prices with other companies.

Accordingly, the Fair Trade Commission discussed related bidding system improvements with Hyundai and Kia and decided to implement the improved bidding system from next year. Although companies hesitated to forgo supply fearing disadvantages in future bids when supply prices were set lower than expected, the right to forgo supply will officially be guaranteed to one winning company. Additionally, to ensure stable factory operations for companies, the method of guaranteeing a minimum of 15% of the supply volume will be continuously maintained.

A Fair Trade Commission official said, "This action is significant not only because it detected and sanctioned long-term bid collusion in the private sector but also because it improved the related bidding system in consultation with the ordering parties to prevent recurrence of collusion." He added, "The Fair Trade Commission will continue to closely monitor collusion in bidding markets in both public and private sectors and actively lead improvements to unreasonable bidding systems identified during case handling, strengthening the link between case handling and system improvement."

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