Korean Companies Fined and Held Civilly Liable for Bid Rigging in Public Procurement in Korea

Five civil engineering companies were found to have colluded in bidding for a Gangwon Development Corporation project in Gangneung City, Korea. Following administrative sanctions imposed by the Fair Trade Commission (FTC), the Chuncheon District Court ruled that these companies must pay damages for their unlawful collusion (bid rigging).

Facts

• In December 2018, the Gangwon Development Corporation issued a Request for Bid to purchase fill material for the development of an industrial complex in Gangneung.
• Prior to the bidding, five Korean civil engineering companies reached an agreement with the predetermined successful bidder. They coordinated the bid amount, distribution of profits, and other related terms, effectively eliminating price competition.
• In September 2023, the Korean Fair Trade Commission concluded that the firms had engaged in unfair collusion, violating the Monopoly Regulation and Fair Trade Act (MRFTA). It issued a corrective order and imposed fines totaling KRW 255 million.
• The Gangwon Development Corporation subsequently filed suit (Case No. 2024gahap30345) against the five companies, seeking damages for the financial harm caused by the collusion.
• On August 20, 2025, the Chuncheon District Court, Civil Division 2 (Presiding Judge Kim Hyeon-gon), ruled that the companies were jointly and severally liable for damages. However, it reduced the defendants’ liability to 70% of the calculated harm.

Court Holding

The court found that the defendants violated Article 19(1)(8) of the former MRFTA, which prohibits collusion that interferes with fair competition in public bidding.

The court opined that:

“The defendants should have independently determined the bidding price by comprehensively considering their sales capabilities, technological prowess, management status, and possibility of winning the bid. Instead, they agreed in advance on the prospective successful bidder, bidding amount, and distribution of profits, thereby avoiding competition. This act nullifies the purpose of the competitive bidding system and excludes the possibility of a fair determination of the successful bidder.”

Calculation of Damages

• The court applied Korean Supreme Court precedent (2019da278228, January 12, 2023), which defines damages from bid rigging as the difference between the collusive bid price and the hypothetical competitive price.
• Based on this method, the court determined that the plaintiff’s losses amounted to KRW 499,742,072, using a successful bid rate of 81.623% of the estimated price as a benchmark.
• Recognizing practical limitations (sample size, difficulty isolating other pricing factors), the court adjusted the liability. The court limited the defendants’ liability to 70% (approximately KRW 349 million ), citing two key reasons: (1) Difficulty in exact damage quantification, and (2) Administrative fines already imposed.

Legal Significance of the Ruling

1. Reinforcement of FTC and Civil Remedies: The case demonstrates how administrative sanctions by the Fair Trade Commission of Korea do not preclude, but rather complement, civil claims for damages.
2. Methodology for Damages: The court reaffirmed that damages from bid rigging are calculated by comparing the collusive price with the hypothetical competitive price, ensuring that recovery targets only the harm caused by anticompetitive conduct.
3. Consideration of Administrative Penalties in Civil Damages: The Court reduced liability to 70%, thus, offsetting the administrative penalty.
4. Policy Message: The judgment sends a strong warning to contractors engaged in public procurement that collusion not only leads to fines but also exposes them to civil liability.

Practical Implications for Businesses in Korea

• Strengthen Korean-based Compliance Programs: Companies bidding for public projects in Korea should adopt robust compliance policies to ensure strict adherence to the MRFTA. Regular internal training on antitrust and fair competition law should be conducted, and a comprehensive compliance audit should be conducted at least every three years.
• Conduct Internal Audits: Businesses in Korea should proactively audit bidding practices and communication channels among employees to detect and prevent potential collusion risks.
• Review Procurement Practices: Participation in public tenders should be carefully documented, with clear internal approval processes to demonstrate independent decision-making in pricing and bidding.
• Coordinate with Counsel: In the event of an investigation by the FTC, engaging experienced and proactive counsel early can mitigate exposure, including through leniency applications or settlement discussions.
• Expect Dual Liability: Even after administrative fines, civil damages can be significant. Businesses should plan for the possibility of parallel enforcement and assess their exposure accordingly.

by Sean Hayes

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as a Top Attorney by AsiaLaw, and IPG Legal is consistently ranked Top Dispute Resolution Law Firm for our litigation and arbitration services.

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