By Lee Hyo-sik
Daewoo Engineering & Construction (E&C) and POSCO Engineering & Construction were fined 70 million won ($58,000) and 50 million won, respectively, in a latest bid-rigging case, a court said Monday.
They were found guilty of colluding to win construction orders from the Ministry of Land, Infrastructure and Transport at an inflated price in 2011.
The other two colluders ― Daelim Industrial and Hyundai Development Company (HDC) ― were not prosecuted under the country’s leniency program as they voluntarily reported the price-rigging to the authorities.
The Seoul Central District Court found Daewoo and POSCO E&C guilty of violating the nation’s Fair Trade Act and Construction Industry Act in imposing fines on the two.
The court also fined four former executives ― one each at Daewoo, POSCO E&C, Daelim and HDC ― 10 million won each for breaching the Construction Industry Act.
The transport ministry held an open bid in March 2011 to select builders for construction of a road connecting Yeosu and Goheung, South Jeolla Province. The project was valued at 130 billion won.
Prior to the bidding, the four individuals met at a restaurant in southern Seoul and agreed to cooperate in order to increase the price of the contract. Under the collusion scheme, Daewoo, POSCO E&C and Daelim submitted slightly higher bid prices than HDC to ensure that the latter obtained the contract at an inflated price.
Under the law, the builders could only ask the government to pay less than a 130 billion won estimate.
Later, Daelim and HDC confessed to the bid rigging to the Fair Trade Commission. The anti-trust agency imposed an 11 billion won fine on the four builders, but then referred only Daewoo and POSCO E&C to the prosecution.
Daelim and HDC avoided prosecution under the leniency scheme, which was enacted to encourage companies to voluntarily disclose collusion and other unfair business practices.
“We decided to fine the two builders for breaking the law. Through the ruling, we are sending a message that businesses that rely on dubious practices will be punished,” the court said. “But, given that the FTC had already slapped Daewoo and POSCO E&C with fines of 1.9 billion won and 4.2 billion won, we decided to reduce our fine.”