‘Competitors in Name Only’ Sweep Bids for Six Years... KFTC Uncovers Bid Rigging in Korea Infrastructure Safety and Technology Corporation Tenders

One CEO Effectively Controlled Both Companies
Unbroken Winning Streak in 16 Bids Since 2016

'Family companies' that have monopolized the winning bids by sharing bid prices in advance in underwater inspection service tenders—used to assess the safety of key national facilities such as bridges and dams—have been caught by the competition authorities. It was revealed that they exploited loopholes in the qualified evaluation system, meticulously executing collusion strategies such as cross-assigning personnel between the two companies.

The Korea Fair Trade Commission (KFTC) announced on the 13th that it has decided to impose corrective orders and a combined fine of 30 million won on two companies—Daum Technology Group Co., Ltd. and Woori Technology Group Co., Ltd.—for agreeing on bid prices in advance in underwater inspection service tenders commissioned by the Korea Infrastructure Safety and Technology Corporation.

'Nominal Competitors' Sharing 97% Ownership... CEO Oversees Both Companies' Operations

The two companies caught in this case were, in fact, operated as a single entity. According to the KFTC's investigation, the CEO of Daum Technology Group not only owns 54% of Daum Technology Group personally, but also holds 97.5% of Woori Technology Group's shares together with family members, effectively managing both companies.

In order to maximize the probability of winning bids, they cross-assigned employees, shifting their company affiliations as needed depending on the work situation. By exploiting the fact that the exact projected price is not known in advance under the qualified evaluation system, the two companies submitted different bid amounts, thereby ensuring that at least one would be within the winning range—a clear collusion strategy.

This collusion was systematically orchestrated under the direction of the CEO of Daum Technology Group. Once the CEO determined the general direction of the bid price, the manager of Daum Technology Group's operations team set the specific bid price or price range and communicated it to Woori Technology Group. The bidding managers of both companies then submitted their bids according to these instructions.

"Continued Monitoring of Collusion in Safety-Related Sectors"

Using these tactics, the two companies participated in 16 tenders from January 2016 to June 2022, winning all 16 contracts without a single failure. The total value of these contracts amounted to approximately 855 million won.

The KFTC determined that their actions completely eliminated price competition in the public bidding market and, in principle, blocked any potential participation by third parties in the event of a failed bid.

The KFTC imposed fines of 14 million won on Daum Technology Group and 16 million won on Woori Technology Group, respectively. This action is significant in that it cracked down on collusion that had been secretly taking place for an extended period in a sector directly related to public safety, such as investigating the physical and functional defects of underwater structures.

The KFTC stated, "This will serve as an opportunity to ensure that the budget of the Korea Infrastructure Safety and Technology Corporation, a public institution, is executed fairly," adding, "We will continue to strengthen monitoring of bid-rigging in sectors closely related to public safety and take strict action whenever violations are detected."

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