'Kepco Ordered Bid Rigging' Hyosung Heavy Industries, LS, HD Hyundai, etc. Hit with Fair Trade Commission Fines

Ten businesses, including Hyosung Heavy Industries, were fined a total of 40 billion KRW for colluding in a bid for power generation equipment ordered by Korea Electric Power Corporation (KEPCO).

On the 29th, the Korea Fair Trade Commission (KFTC) announced that it decided to impose corrective orders and a total fine of 39.1 billion KRW on these businesses for violating the Fair Trade Act. Hyosung Heavy Industries (formerly Hyosung), LS Electric (formerly LS Industrial Systems), HD Hyundai Electric (formerly Hyundai Heavy Industries), Iljin Electric, along with six other businesses including small and medium-sized enterprises Jerong Electric and the Korea Electrical Equipment Business Cooperative, were referred to the prosecution.

According to the KFTC, from 2015 to 2022, over a period of eight years, these companies colluded by agreeing in advance to allocate quantities and then taking turns winning bids in 134 cases worth 560 billion KRW for gas-insulated switchgear ordered by KEPCO.

Gas-insulated switchgear is a device installed in power plants or substations that quickly interrupts excessive current to protect electrical equipment.

The collusion began when Dongnam, a small and medium-sized enterprise, participated in bids previously involving four large and medium-sized companies, and Iljin Electric first proposed the arrangement, which gradually expanded in scale.

The quantity allocation initially was about 87:13 between large enterprises and SMEs, but as the number of participating SMEs increased, the ratio shifted to 60:40 and then 55:45, increasing the SME share.

To conduct secret collusion, each business group appointed a general affairs officer for communication. The Electrical Equipment Cooperative participated as an agent for the SME group and, together with the general affairs officers of the large enterprise group, served as the focal point for the agreement in this case, according to the investigation.

Hwang Won-cheol, head of the Cartel Investigation Bureau at the KFTC, stated, "This action is a case where secret collusion was proven and sanctioned through the KFTC's persistent investigation and meticulous analysis of partial evidence."

He added, "It also signifies a strict sanction against collusion that completely eliminated competition in bids ordered by public enterprises through collusion between the cooperative and large enterprises, causing cost increases for public enterprises and resulting in higher public utility rates."

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