Employees of Hyosung Heavy Industries, HD Hyundai Electric, LS Electric and Iljin Electric, who were indicted and detained in a bid-rigging case over gas-insulated switchgear (GIS) procured by Korea Electric Power Corporation (KEPCO), denied the charges and asked the court to let them stand trial without detention. Prosecutors opposed bail, citing the scale of the collusion and concerns about destruction of evidence.
The 32nd Criminal Division of the Seoul Central District Court (Presiding Judge Ryu Kyung-jin) on the 6th held a bail hearing for four employees of Hyosung Heavy Industries, HD Hyundai Electric, LS Electric and Iljin Electric who were indicted on charges of violating the Monopoly Regulation and Fair Trade Act. Bail is a system that releases a detained defendant under conditions such as paying a bond, restricting residence and banning contact with parties related to the case.
An attorney for the Hyosung Heavy Industries executive said, "Hyosung has no reason to engage in collusion," adding, "The prosecution changed (unlike during the Korea Fair Trade Commission (FTC) probe) from 'volume collusion' to 'bid rigging,' but the details have not been finalized, so we cannot explain." The attorney continued, "There is not the slightest intention to recant the statement, the defendant's residence is clear, and the defendant worked diligently at Hyosung for 26 years," adding, "The defendant can swear there will be absolutely no destruction of evidence."
The other detained defendants also stressed the need for trial without detention. They argued that the case record is so extensive that a sufficient hearing is difficult within the detention period, and that prosecutors already secured objective materials through searches and seizures, making the possibility of destroying evidence low. They also argued there is no risk of flight because their residences are fixed.
Prosecutors asked the court to deny bail. Prosecutors said, "We acknowledge personal circumstances such as the defendants working diligently and reaching a certain position in their companies," but added, "That does not in any way dilute the seriousness of the collusion in this case." They continued, "Given that the defendants have been coordinating their litigation response through the same attorneys, we believe their defense rights can be fully ensured," and asked the court to "deny the requested bail."
The case involves allegations that power equipment companies prearranged the preferred bidder and bid prices in a KEPCO procurement worth about 670 billion won. Prosecutors believe that from Mar. 2015 to Sep. 2022, companies including Hyosung Heavy Industries restricted competition in 145 GIS tenders commissioned by KEPCO. Prosecutors estimated the scale of collusion at about 677 billion won, with at least 160 billion won in unjust gains.
GIS is equipment that protects power facilities by cutting off excessive current at power plants and substations. Prosecutors determined that four companies—Hyosung Heavy Industries, HD Hyundai Electric, LS Electric and Iljin Electric—led the collusion while holding about 90% of the relevant market from 2020 to 2024, and reaped the greatest economic benefits.
At an earlier preparatory hearing, the main defendants denied the charges. Hyosung Heavy Industries argued that the indictment did not specify the facts with sufficient particularity, and HD Hyundai Electric, LS Electric and Iljin Electric also said they do not acknowledge the prosecution's allegations. The companies argue they submitted bids based solely on normal business judgment and internal standards for each company, and that they did not prearrange the winner or bid prices.
Iljin Electric is also contesting the legality of the investigative procedures. An attorney for Iljin Electric previously said prosecutors obtained materials covered by attorney-client privilege (ACP) during the search and seizure, and indicated they would challenge the admissibility of some seized materials.
In Dec. 2024, the Korea Fair Trade Commission imposed corrective orders and a total penalty surcharge of 39.1 billion won on 10 businesses, including Hyosung Heavy Industries, HD Hyundai Electric, LS Electric and Iljin Electric, and referred six of them to prosecutors. KEPCO also filed a damages suit against the companies involved in the collusion.
At the Seoul High Court, an administrative suit is underway challenging the FTC's penalty surcharge and corrective orders. Depending on how the scope of the collusion and the degree of each defendant's involvement are determined in the criminal trial, the outcome is expected to affect the civil and administrative cases as well.