S-1 and ESTec, which colluded on bids for integrated security services at apartment complexes for more than two years, were hit with a 973 million won penalty surcharge and corrective orders by the Korea Fair Trade Commission.
According to the Korea Fair Trade Commission (FTC) on the 5th, the two companies agreed on the prospective winner and bid prices in tenders for integrated security services conducted at 23 private apartment complexes across six regions — Busan, Gwangju, Daejeon, Sejong, South Chungcheong, and North Chungcheong — from Nov. 2022 to Jan. 2025. Integrated security services combine machine-based security such as integrated CCTV control and access control systems with guard services. Only firms that meet certain qualification requirements, including security personnel and capital under the Security Services Industry Act, and are licensed by the Korean National Police Agency, can take part in the bidding.
The Korea Fair Trade Commission (FTC) found that S-1 asked ESTec to act as a dummy bidder to prevent bid failures. ESTec accepted, and S-1 participated in 23 bids and won 21 contracts. The remaining two were awarded to third parties. The FTC applied alleged violations of Article 40, Paragraph 1, Subparagraph 8 of the Monopoly Regulation and Fair Trade Act, which bans bid rigging, to the two businesses.
ESTec had little record of performance in the regions at issue and was not a substantive competitor to S-1. ESTec is a spinoff from S-1.
The Korea Fair Trade Commission (FTC) said, "The fact that ESTec has maintained a cooperative relationship with S-1 over a long period served as the backdrop for the collusion in this case." It added, "It is significant that we detected and sanctioned collusive conduct in bids for integrated security services funded by apartment residents' maintenance fees."