The Fair Trade Commission announced on the 2nd that it has imposed a total penalty surcharge of 152 million won on Hyosung and LS for collusion related to the bidding for replacing power plant distribution panel construction.
According to the Fair Trade Commission, the two companies engaged in collusion by agreeing on the prospective winner and bidding prices in advance during the 'bidding for replacing power plant distribution panel construction' issued by the Daegu Dyeing Industrial Complex Management Corporation in June 2016.
According to the Fair Trade Commission, Hyosung had prior discussions with the project owner’s executives before the bidding announcement and requested LS to submit a sham bid to avoid being disqualified while designated as the bidder in this case. During the bidding process, Hyosung and LS submitted bids as agreed upon in advance, resulting in Hyosung being awarded the contract. In this regard, the Fair Trade Commission explained that a criminal lawsuit is currently underway against eight employees from the project owner, Hyosung, and LS.
The project on which the two companies conspired involved the ground installation of the main boiler electric motor power for the Daegu Dyeing Industrial Complex's power plant and replacing the 440-volt (V) distribution panel, with the project budget exceeding 3.6 billion won.
The Fair Trade Commission regarded the collusion between the two companies as an unfair joint act prohibited by the Fair Trade Act and imposed a penalty surcharge. A penalty surcharge of 104 million won was imposed on Hyosung, which was partitioned into Hyosung Heavy Industries after being split from the industrial sector and 48 million won on LS ELECTRIC.
A Fair Trade Commission official noted, "This action is expected to serve as a wake-up call for bidding participants colluding with project owner officials to win contracts through formal bidding practices," and added, "We will continue to strengthen monitoring of collusion in the electrical construction industry that weakens industrial competitiveness and impose severe penalties when detected."