Fair Trade Commission: "Dongbang, Seogang Enterprises, Donghwa Colluded in Transportation Service Bidding... Corrective Orders and Fines"

Agreement and Execution of Successful Bidders, Supporting Contractors, and Bid Prices by Transportation Section

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission announced on the 17th that it has decided to impose corrective orders (prohibition of future acts) and a total fine of 233 million KRW on three companies?Dongbang Co., Ltd., Seogang Enterprise Co., Ltd., and Donghwa Co., Ltd.?for colluding in the bidding for transportation services of thick plate products produced at the Gwangyang Steelworks.

POSCO had long selected transportation service providers for thick plate products, which are steel plates used in the manufacture of ships, bridges, and industrial machinery, through long-term private contracts. However, starting in 2016, as part of management innovation, it decided to select service providers for some transportation sections through competitive bidding.

In response, the three companies?Dongbang, Seogang Enterprise, and Donghwa?which were the existing service providers, colluded to prevent losses caused by idle facilities if they failed to secure transportation volumes similar to the past and to avoid price declines due to competition.

According to the Fair Trade Commission, the three companies colluded and executed this collusion in the bidding conducted annually by POSCO from 2016 to 2018 for selecting transportation service providers for thick plate products produced at the Gwangyang Steelworks.

Dongbang and Seogang won bids in the tenders from 2016 to 2018, and Donghwa bid as originally agreed in the 2018 tender, with the designated winning bidders winning in 79 out of 121 agreed transportation sections.

Additionally, these three companies secured approximately 5.4 billion KRW in sales by performing services in the agreed transportation sections.

A Fair Trade Commission official stated, "The FTC has focused on detecting and sanctioning bid rigging in transportation markets for various products including steel products, and this action is part of that ongoing effort. This measure is expected to prevent future collusion in the transportation market, reduce transportation costs?which are a major cost factor in various industries?and contribute to price stabilization."

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