Six pharmaceutical companies indicted on charges of collusion in the government's National Immunization Program (NIP) vaccine bidding process were finally acquitted by the Supreme Court. Prosecutors said there was a "sham bidding," but the court found that what happened was part of the process to ensure the government received vaccines in a timely manner.
The Supreme Court's Second Division (Presiding Justice Eom Sang-pil) said on the 7th that on Apr. 4 it affirmed the lower court's acquittal for six pharmaceutical companies—SK discovery, Boryung Biopharma, GC Pharma, Yuhan Corp., Kwangdong Pharmaceutical, and GSK plc—that had been brought to trial on charges of violating the Monopoly Regulation and Fair Trade Act and interfering with bidding. Accordingly, the indictments of executives and employees at each company were also finally dismissed.
Prosecutors had indicted the six companies and their current and former executives and employees on charges that from 2016 to 2019, while participating in bids for cervical cancer vaccines and others for the government, they conspired in advance on winning prices and used other wholesalers as stooges to obstruct fair competition.
In the first trial, the court fined GC Pharma and GSK plc 70 million won each; Boryung Biopharma and Yuhan Corp. 50 million won each; and SK discovery and Kwangdong Pharmaceutical 30 million won each. It also fined current and former executives and employees of the six companies between 3 million won and 5 million won.
The first trial court said, "Each act of collusion was carried out through organized and sustained coordination between vaccine manufacturers, who virtually monopolize vaccine supply, and pharmaceutical distributors."
By contrast, the appellate court acquitted them, saying "this corresponds to a situation where there is no proof of a crime." The ruling took into account the structure in which SK discovery, Boryung Biopharma, GC Pharma, Yuhan Corp., and Kwangdong Pharmaceutical, as domestic distributors, received vaccines from GSK plc, the manufacturer.
In the vaccine industry, a practice has formed in which manufacturers issue supply commitment letters only to distributors with existing relationships. Citing this, the appellate court found that the companies were joint sellers with monopolistic positions, and therefore there was effectively no competition with other companies for them to obstruct.
The court also noted that ensuring timely vaccine supply was a highly important issue at the time, and that supply disruptions were even reported to the presidential office. It added, "The Korea Disease Control and Prevention Agency saw the root of the problem as holding bids instead of using private contracts, and in those cases, single-bid situations occurred and winners were not determined," and continued, "It is worth considering whether the defendants' conduct fundamentally stemmed from institutional shortcomings that required bidding even for vaccines supplied on a monopolistic basis."
The Supreme Court dismissed all appeals, saying the lower court did not misunderstand the law.
The case began in September 2019 when the Korea Fair Trade Commission filed a criminal complaint alleging that KOREAVACCINE, which imports infant and toddler tuberculosis (BCG) vaccines, and others abused their market-dominant positions. During the investigation, prosecutors asked the Korea Fair Trade Commission (FTC) to file a complaint, saying six pharmaceutical companies were suspected of collusion in vaccine bidding, and continued the probe.
They were brought to trial on charges of collusion in BCG vaccine bidding from 2013 to 2019, but following the first and second trials, the Supreme Court in Mar. 2024 finalized their acquittal. The ruling considered that there were no other domestic pharmaceutical companies besides KOREAVACCINE that could import the vaccine, and that the winning amounts were close to the estimated unit prices set at the time by the Korea Centers for Disease Control and Prevention.