- Collusion among 20 furniture companies in 190 bids issued by 16 construction companies
- Pre-arranged bid winners and bid prices
- Corrective orders, fines of approximately KRW 18.3 billion, and prosecution of four companies
The Korea Fair Trade Commission (KFTC), chaired by Han Ki-jeong, has imposed corrective orders and fines totaling approximately KRW 18.3 billion (tentative) on 20 furniture companies for colluding in 190 system furniture bids issued by 16 construction companies from February 2012 to November 2022. Additionally, four of these companies will be referred for prosecution.
Companies Subject to Sanctions
The sanctioned companies include Nexis Design Group, Neps, Dongsungsa, Mijend, Laf System, SpaceMax, IREX KNP, SND ENG, Youngil Industry, Wooami, Wooami Furniture, Jamat, JC, Changui International, KD, Combi, Hanssem, Hanssem Nexus, Garim, and Gonggan Crazing. Among these, Dongsungsa, SpaceMax, Jamat, and Hanssem have been referred for prosecution.
Background on System Furniture
System furniture is a type of built-in furniture typically installed in apartments, consisting of wooden shelves supported by aluminum pillars. Examples include dress room furniture and pantry storage units. Construction companies conduct separate bidding processes for system furniture, distinct from built-in furniture such as closets and kitchen units.
Details of the Collusion
Sales representatives from the 20 furniture companies colluded in 190 system furniture bids conducted at apartment construction sites nationwide. Through meetings and phone communications, they:
- Pre-determined the bid winner
- Agreed on bid prices
- Executed their agreements accordingly
To allocate winning bids, the companies used random selection methods such as drawing lots or ladder games. The designated winning company then shared a portion of the awarded project with the colluding companies or provided them with monetary compensation. These arrangements were even documented in writing.
Moreover, in all of these bids, the winning bidder determined the prices for the other bidders, who then submitted their offers accordingly, ensuring that the collusion was carried out successfully.
As a result, the average winning bid rate for these collusive bids was nearly 100%, and the total revenue related to these 190 bids amounted to approximately KRW 332.4 billion.
Significance of This Sanction
This case marks the third major sanction on bid-rigging related to apartment interior projects, following previous cases involving:
- Built-in (special order) furniture bid-rigging
- System bathroom bid-rigging
This investigation uncovered a decade-long collusive practice in the system furniture bidding market, which artificially inflated apartment prices. The KFTC's actions aim to eliminate illegal practices affecting housing costs.
The KFTC will continue to strengthen its monitoring of industries closely related to essential living needs, such as housing. It remains committed to strictly sanctioning collusion to ensure fair competition and prevent future bid-rigging.