US$ 1.26 billion penalty for South Korea metro cartel

By Helen Wright02 January 2014

South Korea’s Fair Trade Commission has imposed penalties totalling KRW 1.32 trillion (US$ 1.26 billion) on 21 contractors it accuses of collusion in bidding for contracts on a metro project in the city of Incheon.

The contractors involved include Hyundai Engineering & Construction, Hyundai Development Company, POSCO E&C, GS E&C, SK E&C and Daewoo E&C.

They are accused of rigging bids for the 29.3 km Incheon Subway Line 2 project, which includes 27 stations. Construction started in 2009 and is planned for completion in 2016.

The contractors are said to have acted anti-competitively by colluding to decide which would submit the most advantageous bids to construct the metro, with others submitting low-quality designs. According to local media, the FTC plans to refer 15 of the companies for further investigation.

The news comes after the South Korean government in October 2013 banned ten companies from public projects for up to 15 months following price fixing allegations. The companies are accused of fixing prices on the KRW 22.2 trillion (US$ 20.5 billion) Four Rivers Restoration project – a scheme to rehabilitate South Korea’s main waterways.

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