The Fair Trade Commission said on the 14th that it imposed a 4.358 billion won penalty surcharge on eight companies that colluded in bids to buy "water clarifier" (organic coagulant) used at water treatment plants.
An organic coagulant is a chemical that clumps together fine particles in water so they settle. It is used for drinking water and wastewater treatment at places such as water treatment plants and sewage treatment plants.
According to the Korea Fair Trade Commission (FTC), the collusion continued from May 2017 to Mar. 2023. When local governments nationwide and water management contractors held bids through the national procurement system, related companies contacted one another in advance by phone and other means to decide the winner and the price, then submitted their bids accordingly.
The core actors were large companies that dominated the market. At the time, only two companies produced powdered organic coagulants: SNF Korea and Kolon Life Science. The two agreed not to poach existing customers and set a "basic rule" to split volumes 7 to 3. After that, in each bid, they agreed in advance on the winner and the bid price.
From Oct. 2018 to Sep. 2022, when the collusion occurred, out of 225 bids for powdered or combined powdered-liquid products, SNF Korea took 141 and Kolon Life Science took 82. Only the remaining two were won by other companies.
There was also collusion among smaller companies. Giryung Industry, Miju NB Chem, SY Chem, Hansol Chemical, Korea Ecolab, and Hwaseong Industry selected bids in which they judged SNF Korea would not participate or could be beaten, and divided the volumes among themselves.
The eight companies colluded in a total of 294 bids, and in 273 of those, the company decided in advance actually won. The Korea Fair Trade Commission (FTC) pointed out that this was "collusion that led to higher winning prices for water treatment chemicals purchased with public funds."
The Korea Fair Trade Commission (FTC) imposed penalty surcharges of 2.186 billion won on SNF Korea, 1.822 billion won on Kolon Life Science, 880 million won on Miju NB Chem, 189 million won on SY Chem, 24 million won on Hansol Chemical, 28 million won on Korea Ecolab, 15 million won on Giryung Industry, and 6 million won on Hwaseong Industry.
An official at the Korea Fair Trade Commission (FTC) said, "Bid rigging in the public institutional sector, such as at water treatment plants, can ultimately increase the burden on taxpayers and water bills," adding, "We will continue to focus on checking for bid rigging in public areas such as water treatment and impose strict sanctions when detected."