A number of recent cases in Japan and South Korea reflect an increasing determination of Asian antitrust authorities to enforce the antitrust prohibition against bid rigging.
The Japanese cases
The Japanese Fair Trade Commission (the JFTC) sanctioned 70 suppliers of Kansai Electric Power on 31 January 2014, and imposed fines and cease-and-desist orders for their involvement in bid-rigging practices in 2009. The fines imposed amount to a total of ¥2.37 billion ($23 million).
In February 2014, the JFTC sanctioned 35 local construction companies for rigging tenders for pavement works and other civil construction projects in the prefecture between 2009 and 2012. In this case, the JFTC imposed cease-and-desist orders and fines amounting to a total of ¥223.5 million ($2.2 million).
Further, in March 2014, the JFTC referred eight engineering companies and eight of their employees to the prosecutor’s office for criminal prosecution. Under the Japanese Antimonopoly Act, individuals may face up to five years’ imprisonment and criminal fines of up to ¥5 million ($48,000). These criminal sanctions come in addition to possible administrative penalties imposed by the JFTC.
The Korean cases
On 2 January 2014, the Korea Fair Trade Commission (KFTC) imposed heavy sanctions on construction companies that had rigged the tenders for the construction of the second line of the Incheon Subway in 2009. A total fine of ₩132.2 billion ($125 million) was imposed on 21 companies, including Hyundai, Daewoo, SK Construction and GS Construction. In addition, one company and three of its employees were sanctioned ₩145 million for having obstructed the KFTC’s investigation (₩100 million or $95,000 for the company and ₩15 million or $14,000 for each of the employees). These are the highest fines imposed by the KFTC in the past two years, and the highest ever in a bid-rigging case. In keeping with its practice in recent years (including in the Seoul subway bid-rigging case last year), the KFTC referred 15 of the companies to the public prosecutor’s office for criminal prosecution.
In the same month, the KFTC imposed fines totalling ₩5.4 billion ($5 million) and corrective orders on 21 water pump manufacturers for having rigged tenders organised by the Public Procurement Service in Korea. Further, the KFTC announced on 20 January 2014, the imposition of corrective orders and fines totalling ₩88 million ($82,000) on two engineering companies for bid-rigging conduct with respect to several tenders for the supply and installation of water meter reading systems between 2007 and 2013.
In February 2014, the KFTC announced the imposition of corrective orders and fines totalling ₩556 million ($520,000) on five local gas boiler manufacturers for bid-rigging conduct. The manufacturers were found to have rigged 21 bids for the supply and installation of domestic gas boilers for the Busan Mega Center in March 2006, as well as for welfare housing in Hanam city, Gyeonggi Province in March 2009.
More cases followed in the month of March, during which the KFTC adopted three decisions sanctioning bid-rigging activities of local construction companies and local magnetic ink character recognition (MICR) scanner suppliers. MICR is a character-recognition technology mainly used to facilitate the processing and clearance of cheques and other documents in the banking sector.
The KFTC announced, on 3 March 2014, the imposition of corrective orders and fines totalling ₩12.12 billion ($11 million) on two construction companies (Posco E&C and Kolon Global) for rigging tenders in relation to improvement works at a sewage treatment plant in Gongchon, Incheon and to a water treatment project in Gwangju, Jeonnam. The KFTC referred two employees for criminal prosecution to the public prosecutor’s office. ;On 24 March 2014, the KFTC imposed corrective orders and fines totalling ₩40.1 billion ($37 million) on eight local construction companies for rigging the tender in relation to the construction of Line 3 of the Daegu subway system in April 2009. The companies were found to have met in November and December 2008 to discuss bidding prices and to agree on the winner of the bid. Finally, the KFTC announced, on 10 March 2014, the imposition of corrective orders and fines totalling ₩194 million ($181,000) on Chungho ComNet and Inzent, two suppliers of MICR scanners, for rigging eight tenders organised by the National Agricultural Cooperative Federation between 2006 and 2009.
There is one area of the law on which all authorities agree. They have a zero-tolerance policy on collusive conduct among competitors, in particular in the context of tender procedures. There is virtually no year during which a competition authority does not announce enforcement action against bid-rigging practices. Increasingly, companies and their executives are referred for criminal prosecution, particularly in South Korea.