Prosecutors Indict 8 Furniture Companies Including Hanssem for 2.3 Trillion Won 'Furniture Bid Rigging' Conspiracy

The prosecution has indicted executives and corporations of major domestic furniture companies en masse on charges of colluding in furniture bids worth around 2.3 trillion won.

The Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Lee Jeong-seop) on the 20th indicted without detention eight furniture company corporations including Hanssem, Hanssem Nexus, Neps, Enex, Nexis, Woami, Sun & L Interior, and Reverse, as well as 12 executives and employees including former Hanssem Chairman Choi Yang-ha on charges of violating the Framework Act on the Construction Industry and the Fair Trade Act. Two sales staff who concealed and destroyed important evidence during the prosecution's search and seizure were summarily indicted on charges of evidence destruction and concealment.

Prosecutors [Image source=Yonhap News]

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They are accused of agreeing on the winning bidders and bid prices in kitchen and general furniture construction bids for 783 new apartment construction sites nationwide ordered by 24 construction companies from January 2014 to December 2022. The scale of the collusive bids is estimated to be about 2.3261 trillion won.

The prosecution found that they held prior meetings to agree on the order of winning bids, shared bid prices and estimates, and set up 'dummy bids' to induce the agreed company to win the bid at the lowest price. The winning companies earned profits by installing built-in furniture in newly constructed apartments and officetels at high supply prices.

The prosecution pointed out, "Collusion in built-in furniture bids raises sale prices in the long term, making it difficult for ordinary citizens to achieve their dream of owning a home," and added, "Illegal practices have been widespread in the industry, and the involved executives and employees did not feel much guilt." They emphasized, "We indicted eight company CEOs or general executives, including three major shareholders, holding senior officials accountable."

Initially, nine furniture companies were under investigation, but companies that voluntarily reported the collusion were excluded from prosecution under the 'leniency' system, which reduces punishment for voluntary reporting.

This case is the first instance where the prosecution directly initiated an investigation through leniency. Typically, bid-rigging cases are first investigated by the Fair Trade Commission, which then files complaints leading to prosecution investigations, but in this case, the prosecution started the investigation upon voluntary reports. However, the prosecution explained that since the case was conducted alongside the Fair Trade Commission's administrative investigation, they held several meetings and maintained close communication with the commission.

The prosecution emphasized, "We will strictly respond according to law and principles not only to the corporations involved in collusion but also to individuals who played a leading role, so that a fair competition order, the foundation of a free market economy, can be restored and established."

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