The Fair Trade Commission imposed penalty surcharges worth hundreds of billions of won on 10 corporations, including Hyosung Heavy Industries, LS Electric, and Hyundai Electric, for colluding in bids for Korea Electric Power Corporation's (KEPCO) power plant equipment over seven years.
On the 29th, the Fair Trade Commission noted that it would impose total penalty surcharges of 39.156 billion won on 10 corporations for violating the Monopoly Regulation and Fair Trade Act and file complaints against six corporations.
Hyosung Heavy Industries was fined the highest penalty surcharge of 11.237 billion won, followed by LS Electric with 7.239 billion won, and HD Hyundai Electric with 6.699 billion won. The corporations subject to complaints are ▲Hyosung Heavy Industries ▲LS Electric ▲HD Hyundai Electric ▲Iljin Electric ▲Jeyoung Electric ▲Korean Electric Power Equipment Industry Association, six in total.
The current item subject to collusion is the 170kV gas-insulated switchgear (GIS). GIS is a device that protects electric facilities by interrupting excessive current after being installed in a power plant or substation. To bid on this product, one must obtain bidding qualification from KEPCO.
Until 2014, only four corporations including Hyosung Heavy Industries, LS Electric, and Hyundai Electric participated in the bidding. However, in October 2014, competition in the market began to overheat as the small and medium-sized enterprise Dongnam joined. As a result, collusion began in early 2015 when Dongnam proposed collusion to Iljin Electric to increase winning rates, followed by Jeyoung Electric, Seojeon Electric, D2 Engineering, and Intek Electric Electronics joining in succession.
The participating corporations were divided into large and small-to-medium-sized corporations to allocate volumes. Initially, the ratio was 87 to 13, but it was adjusted to 55 to 45 due to the increase in the number of small and medium-sized corporations. It was found that corporations communicated through their general affairs offices to avoid leaving evidence of collusion.
KEPCO also placed a region-restricted bid for small and medium-sized enterprises with factories directly producing in Naju, South Jeolla Province, where three corporations including Dongnam agreed to evenly distribute the awards for 11 cases of region-restricted bidding.
The Fair Trade Commission stated, 'This is a case where sneaky collusion was proven and sanctioned through the persistent investigation by the Fair Trade Commission and thorough analysis of partial evidence of collusion,' and added, 'We plan to strengthen investigative capabilities to effectively respond to increasingly advanced collusion and sternly sanction upon detection.'