'Railway Sleepers' Procurement Collusion Uncovered After 9 Years... Fair Trade Commission Imposes 12.6 Billion KRW Fine and Refers to Prosecution

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[Sejong=Asia Economy Reporter Joo Sang-don] The Korea Railroad Corporation, the Korea Rail Network Authority, and private construction companies have been found by the Fair Trade Commission to have colluded for nine years in the bidding process for railroad sleepers, with five companies including IS Dongseo, Taemyeong Industrial, Samsung Industry, Samsung Concrete, and Jeil Industry involved.

On the 9th, the Fair Trade Commission announced that it imposed corrective orders and a total fine of 12.573 billion KRW on the five companies and decided to refer Taemyeong Industrial to the prosecution.

According to the Fair Trade Commission, the five businesses agreed in advance on the winning bidders, dummy bidders, bid prices, and quantity allocation ratios in a total of 54 sleeper purchase bids from November 2009 to October 2018 and executed these agreements.

Sleepers are structures placed at regular intervals on the railroad subgrade to support and fasten the rails. The collusion targeted PC sleepers mainly used in conventional railroads and bi-block sleepers mainly used in high-speed railroads.

The collusion began when the five companies agreed from November 2009 to allocate quantities (subcontract) after IS Dongseo won the PC sleeper public procurement bid (KORAIL) at a high price. From the end of 2012, the collusion among the five companies was firmly maintained through regular meetings, and from May 2013, the agreement items expanded to PC sleeper private procurement bids (private construction companies) and from August 2014 to bi-block sleeper bids (Rail Network Authority, private construction companies), proceeding in the same manner.

As a result of executing the agreement, the agreed winning bidder won in 51 out of 54 bids, and the winning bid amounts increased during the period.

A Fair Trade Commission official said, "This action was taken after a focused investigation of the railroad product market following a series of railroad accidents at the end of 2018, uncovering long-term collusion in railroad sleeper bids," adding, "It is expected to eradicate wrongful practices in the railroad sleeper market, restore competitive order, and contribute to saving national budget."

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