Hyundai Rotem Explains "Collusive Conduct" Acknowledged by Fair Trade Commission but Denies Leading Bid Rigging

"Only 10% Order Win Rate in 2018...Not a Dominant Position to Lead Collusion"

[Asia Economy Reporter Park Sun-mi] Hyundai Rotem clarified on the 14th that while it acknowledges the joint conduct in the Fair Trade Commission's (hereafter FTC) announcement of the ‘Rail vehicle collusion detection involving Seoul Line 2 and Gimpo Urban Railway,’ Hyundai Rotem was not the leader of the bid collusion. The company also expressed its commitment to preventing recurrence of unfair practices in the future.

The FTC announced that it decided to impose corrective orders and a total provisional fine of 56.4 billion KRW on three rail vehicle manufacturers?Dawonsys, Woojin Industrial Systems, and Hyundai Rotem?for unfair joint conduct in bids for rail vehicle purchases issued by railway operators such as Korail and Seoul Metro the previous day.

In response, Hyundai Rotem stated, “Unfair joint conduct should never occur under any market conditions, and we sincerely regret this. We will strive to prevent recurrence of such unfair practices in the future.”

In fact, since 2020, Hyundai Rotem has declared transparent ethical management to cease unfair practices, established a Transparent Bidding Review Committee involving outside directors to strengthen monitoring of the bidding process, and is doing its best to prevent unfair joint conduct by providing compliance education and obtaining pledges to practice transparent ethical management from its executives and employees.

However, Hyundai Rotem explained, “The joint conduct in this case was merely a consensus formed among the three rail vehicle manufacturers to avoid excessive low-price bids under the lowest bid system and to secure a minimum price necessary for corporate operation amid abnormally low government rail vehicle budgets, not a joint act for unfair profits.”

It added, “During the collusion period, the rail division’s operating loss rate was 5%, making it difficult to overcome the situation solely through internal cost reduction and production efficiency efforts.”

Meanwhile, according to the FTC announcement, at the time in 2019, there was litigation between Woojin Industrial Systems and Dawonsys, and their relationship was not amicable, which made it appear as if Hyundai Rotem led the joint conduct. However, Hyundai Rotem emphasized, “We only played a liaison role at that time, and the final agreement was separately executed through meetings between Woojin Industrial Systems and Dawonsys,” adding, “The FTC’s announcement that the collusion was led by Hyundai Rotem is not true.” In particular, it explained, “Under the lowest bid system, Hyundai Rotem was not in a dominant position to lead joint conduct in the domestic rail vehicle market due to excessive price competition.”

Hyundai Rotem stressed that since the three-company competitive system began in 2018, the company’s domestic market share was only about 10%, lacking bidding competitiveness, and looking at the domestic rail vehicle order status, Dawonsys won 3 out of 5 bids, Woojin Industrial Systems won 1, and Hyundai Rotem won 1, indicating it was not in a dominant position.

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