Seoul, January 22, 2025 – The Korea Fair Trade Commission (KFTC) has imposed a fine of 152 million KRW (USD 106,000) on Hanjin E&I for orchestrating bid-rigging schemes in public tenders for scientific equipment. This enforcement action highlights long-standing anti-competitive practices that impacted tenders issued by public institutions, including the Korea Institute of Nuclear Safety, over a seven-year period from 2015 to 2022.
Nature of the Violation
Hanjin E&I, alongside two affiliated companies, Daejeon Scientific Equipment and TS Scientific Equipment, manipulated bid prices for 89 procurement tenders to increase their chances of winning contracts. The KFTC uncovered that Hanjin E&I controlled the bidding process by setting tender prices for its affiliates, regardless of which company formally won the bid. In essence, the contracts were predetermined to benefit Hanjin E&I.
Key findings include:
- Controlled Bids: Hanjin E&I used its affiliates to submit coordinated bids, ensuring inflated pricing aligned with predetermined thresholds.
- Dominant Influence: Daejeon Scientific Equipment and TS Scientific Equipment were directly or indirectly controlled by Hanjin E&I, with ties such as shared leadership and employee overlap.
As a result, Hanjin E&I secured 44 contracts, valued at substantial public expense, circumventing fair competition.
Penalties and Implications
The KFTC imposed corrective measures, including:
- A fine of 152 million KRW levied solely on Hanjin E&I, as the two affiliates had ceased operations.
- A cease-and-desist order mandating the company to halt such practices immediately.
The KFTC stated that this enforcement action is a critical step in ensuring transparency in public procurement processes and preventing the misuse of public funds. It is expected to promote fair trade practices and curb similar violations in the future.
Broader Impact and Future Measures
“This decision reinforces our commitment to eradicating bid-rigging schemes that distort market dynamics and waste taxpayer resources,” said a KFTC representative. Moving forward, the Commission plans to intensify monitoring of public tenders and impose stringent penalties on violators to safeguard fair competition.
