Hello, I am Law Firm Cheongchul, Attorney Eom Sang-yoon.

Today, we will discuss bid collusion and the concept of a single joint act.

[Question]

In several bids from a public institution, we bid after discussing the bid prices and prospective winners with the representatives of participating companies. In such cases, I understand that bid collusion is established,

Will separate sanctions be imposed for each bidding case?

[Answer]

In the process of participating in bidding, any agreement in advance with other participants regarding bid prices or prospective winners constitutes an 'unfair joint act' (collusion) prohibited by the Monopoly Regulation and Fair Trade Act ("Fair Trade Act").

In this case, the businesses participating in the collusion may face sanctions such as corrective orders, fines, restrictions on bidding eligibility, and criminal penalties.

On the other hand, if collusion has occurred over several bids for several years, the courts hold the view that the series of agreements can be regarded as a single joint act as a whole. Thus, from the time of the last agreement of the overall joint act, the statute of limitations begins, making it possible to impose sanctions even on bid cases that have individually lapsed under the statute of limitations.

Regarding the criteria for recognizing such 'one joint act', the court stated, "If businesses have made agreements on the basic principles of unfair joint acts and have continued to execute them through numerous agreements, as well as if they have made multiple agreements over a long period without such basic agreements, provided that each agreement has continuously been executed without interruption for the purpose of achieving the same objective based on a single intention, then even if there have been some changes in the specific content or members of each agreement, as long as there are no special circumstances, such a series of agreements can be regarded as one single unfair joint act overall” (2008du16179).

In other words, 'one joint act' does not require that the agreement forms for individual bids be the same; as long as they have been continuously executed to achieve the same objective with a single intention, it can be recognized as one act overall even if there were no basic agreements.  

For example, the consistent purpose of ensuring the benefits of businesses through competition avoidance in the market for the purchase bid of intake pumps, as well as the fact that the content of the agreement and the form of execution have effectively repeated in a similar structure, making it difficult to see essential differences in each individual agreement, and that most businesses manufacturing and supplying intake pumps participated in this joint act without explicitly withdrawing or acting contrary to the agreement, can be elements supporting the recognition of a single joint act overall (2014nu43013).

Practically, the existence of one joint act is an important issue as it relates to the amount of fines imposed. The Fair Trade Act stipulates that "No corrective action can be ordered or fines imposed after 7 years from the date of termination of the violation" (Article 80, Paragraph 4), so if long-term bid collusion occurring over 7 years is divided by bidding cases, fines cannot be imposed on those bids prior to 7 years from the perspective of the imposition date. However, if viewed as a single joint act overall, the end date of the violation corresponds to the date of the last bid collusion, hence bids prior to the imposition date of 7 years will also be included in the basis for calculating the fine, inevitably increasing the scale of the fines.

Therefore, to potentially reduce the fine amount, one should examine whether it constitutes a 'single joint act' and analyze the benefits and disadvantages to clarify the necessary matters.

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