KT, LG U+ fined for bid rigging

By Nam Hyun-woo

KT, LG Uplus, SK Broadband and Sejong Telecom were fined for rigging bids for state projects, according to the antitrust agency Thursday.

The Fair Trade Commission (FTC) said it has fined the four companies a combined 13.33 billion won ($11.5 million) for rigging 12 biddings for government projects to set up dedicated lines between April 2015 and June 2017. The FTC will file complaints against KT with the prosecution.

Of them, KT was fined the heaviest with 5.74 billion won, followed by LG Uplus 3.9 billion won, SK Broadband with 3.27 billion won and Sejong Telecom 417 million won.

The watchdog said the companies have colluded to determine the winner of each bidding before the actual process began. Then, the others either played no role or skipped the bidding so that the predetermined winner could easily win the contract.

The winner then signed line leasing contracts with the other companies and paid line rental fees, regardless of whether it used the line or not, in return for their help in the bidding. In five biddings, winners paid 13.2 billion won without using the leased lines, according to the FTC.

The biddings they rigged include some key government projects such as the backbone network connecting five government complexes and 17 cities and provinces and the dedicated line connecting the Korea Meteorological Administration with the National Center for Meteorological Supercomputer.

In the bidding for the backbone network project in April 2015, KT won the 24.93 billion won contract, while LG Uplus and SK Broadband did not participate in the bidding to support KT.

In return, KT signed a 4 billion won line lease contract with LG Uplus, and LG Uplus signed a separate 2.2 billion won lease contract with SK Broadband so they could share the reward from KT.

The FTC said the companies rigged the biddings to prevent a price drop and save costs from changing facilities between different firms.

“This is a stern measure against info-tech companies which have long been taking rigging for granted,” an FTC official said. “The FTC will enhance its monitoring on colluding and bid rigging and help government institutions and public institutions to claw back unfair profits.”