The trial of power equipment companies, including Hyosung Heavy Industries, HD Hyundai Electric, LS Electric, and Iljin Electric, indicted on suspicion of rigging bids for Korea Electric Power Corporation (KEPCO)'s gas-insulated switchgear (GIS), will continue on the 6th.
The Criminal Agreement Division 32 of the Seoul Central District Court (Chief Judge Ryu Kyung-jin) will hold a hearing that day for eight corporations, including Hyosung Heavy Industries, HD Hyundai Electric, LS Electric, and Iljin Electric, and their employees, who were indicted on charges of violating the Monopoly Regulation and Fair Trade Act. On Mar. 27, a preparatory hearing was held.
Prosecutors say that from Mar. 2015 to Sept. 2022, in 145 GIS bids ordered by KEPCO, the parties restricted competition by deciding the intended winners and bid prices in advance. GIS is equipment that protects power facilities at power plants and substations by cutting off excessive current. Prosecutors estimated the collusion at 677.6 billion won and the unjust gains at a minimum of 160 billion won.
In Dec. 2024, the Korea Fair Trade Commission imposed corrective orders and a total penalty surcharge of 39.1 billion won on 10 business operators, including Hyosung Heavy Industries, LS Electric, HD Hyundai Electric, Iljin Electric, Dongnam, D2 Engineering, Seojeon Electric Machinery, Intec Electric & Electronic, Cheryong Electric, and the Korea Heavy Electric Industry Cooperative. Of these, six were referred to prosecutors, taking into account the degree of involvement. The Korea Fair Trade Commission (FTC) determined the case to be bid rigging combining the selection of a group of intended awardees and the sharing of bid prices.
Prosecutors believe the collusion was structured so that large and mid-sized corporations and small businesses split the bid volumes. Major companies such as Hyosung Heavy Industries, HD Hyundai Electric, LS Electric, and Iljin Electric set the award sequence and prices based on their market positions, and the small business group also joined the agreement through the Korea Heavy Electric Industry Cooperative.
The Korea Fair Trade Commission (FTC) and prosecutors determined that the collusion raised KEPCO's purchase expense and created a factor for higher public utility costs. However, because separate calculations confirming how much was reflected in actual electricity rates have not been presented, the primary issues at trial are expected to be whether collusion was established and the extent of each defendant's involvement.
The large corporate defendants largely denied the charges at the preparatory hearing. Hyosung Heavy Industries argued that the indictment did not specifically identify the facts, and HD Hyundai Electric, LS Electric, and Iljin Electric also said they do not admit the charges. Iljin Electric is expected to contest the admissibility of some evidence on the grounds that attorney-client privilege was violated during the search and seizure.
Major law firms have been brought in. Hyosung Heavy Industries is represented by Kim & Chang, HD Hyundai Electric by BAE, KIM & LEE LLC, LS Electric by Yoon & Yang LLC, and Iljin Electric by Shin & Kim LLC, according to reports.
This trial is the process of determining criminal liability following the Korea Fair Trade Commission (FTC)'s sanctions. At the Seoul High Court, an administrative suit contesting the penalty surcharge and corrective order is underway, and a separate damages suit filed by KEPCO against the companies is also pending. Depending on how the specific implementation of the collusion and the admissibility of evidence are assessed in the criminal trial, related civil and administrative cases could be affected.