Given that collusion is a form of malpractice that can gnaw away at the national coffers, it should be promptly uprooted without fail. As things stand, however, we wonder if the day will come when construction companies will ever compete fairly.
The Fair Trade Commission has imposed 435.5 billion won ($424 million) in fines on 28 local builders on charges of colluding on a 3.6 trillion won state project to construct a bullet train network linking the nation's western region. The FTC also asked the prosecution to investigate 15 companies that played major roles in the collusion and seven of their executives
It is the biggest fine the business watchdog has ever levied on builders and the second-largest one following a 669 billion won fine slapped on six LPG retailers in 2010.
How builders collude on large public-works projects is similar. The companies involved in the bidding decide among themselves in advance which companies will win which bids.
Building firms auction off bids at high prices in order not to incur suspicions of collusion, and this means that taxpayers' money flows unduly into construction companies. In the latest case, the builders won bids at 78 percent of previously estimated costs for each section, compared with 73 percent on average.
The 184.5-kilometer Honam High Speed Railway is divided into 19 sections, and 21 construction firms, including seven major builders, rigged bidding prices for nearly all of them to win one section. Seven other companies helped the successful builders by taking part in the bidding perfunctorily.
The railway, scheduled to be completed by the end of this year, will link Seoul with Gwangju via Osong at a cost of 8.35 trillion won.
The construction industry admitted that the collusion was wrong, but reacted angrily, saying the fines were excessive amid the continuing construction slump. The builders argue that they can't make profits without collusion because public-works projects are carried out through a scheme to select those that offer the cheapest rates.
Of course, the government needs to listen to complaints that the current system in which a construction company can win only one section in a single project has been encouraging collusion. And the negative impact of the FTC's string of penalties on their winning of overseas contracts is understandable.
But collusion is a criminal act. It's for this reason that the government should hurry to come up with viable measures to end the vicious circle of collusion and fines. What's clear is that fines ought to be bigger than undue gains. It's good in this regard that the government has decided to strengthen punishment for habitual offenders of fair trade rules.
Builders last week committed themselves to uprooting collusion, but actions speak louder than words.
The Fair Trade Commission has imposed 435.5 billion won ($424 million) in fines on 28 local builders on charges of colluding on a 3.6 trillion won state project to construct a bullet train network linking the nation's western region. The FTC also asked the prosecution to investigate 15 companies that played major roles in the collusion and seven of their executives
It is the biggest fine the business watchdog has ever levied on builders and the second-largest one following a 669 billion won fine slapped on six LPG retailers in 2010.
How builders collude on large public-works projects is similar. The companies involved in the bidding decide among themselves in advance which companies will win which bids.
Building firms auction off bids at high prices in order not to incur suspicions of collusion, and this means that taxpayers' money flows unduly into construction companies. In the latest case, the builders won bids at 78 percent of previously estimated costs for each section, compared with 73 percent on average.
The 184.5-kilometer Honam High Speed Railway is divided into 19 sections, and 21 construction firms, including seven major builders, rigged bidding prices for nearly all of them to win one section. Seven other companies helped the successful builders by taking part in the bidding perfunctorily.
The railway, scheduled to be completed by the end of this year, will link Seoul with Gwangju via Osong at a cost of 8.35 trillion won.
The construction industry admitted that the collusion was wrong, but reacted angrily, saying the fines were excessive amid the continuing construction slump. The builders argue that they can't make profits without collusion because public-works projects are carried out through a scheme to select those that offer the cheapest rates.
Of course, the government needs to listen to complaints that the current system in which a construction company can win only one section in a single project has been encouraging collusion. And the negative impact of the FTC's string of penalties on their winning of overseas contracts is understandable.
But collusion is a criminal act. It's for this reason that the government should hurry to come up with viable measures to end the vicious circle of collusion and fines. What's clear is that fines ought to be bigger than undue gains. It's good in this regard that the government has decided to strengthen punishment for habitual offenders of fair trade rules.
Builders last week committed themselves to uprooting collusion, but actions speak louder than words.
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