KFTC Investigation and Criminal Prosecution of Alleged Bid Rigging by Furniture Companies

Lee & Ko’s Antitrust and Competition Practice Group successfully represented the third-largest domestic furniture company, Enex, in a criminal case on bid rigging regarding the supply of built-in furniture for apartment complexes. This large-scale bid rigging case involved approximately 780 construction sites nationwide, KRW 2.3 trillion and led to the prosecution of 12 individuals, including 6 CEOs and 8 leading furniture companies by the Prosecutor’s Office in April 2023. 

Prior to this case, the Korea Fair Trade Commission (“KFTC”) would first conclude its investigation into collusion cases and issue criminal referrals to the Prosecutor’s Office, which would initiate a criminal investigation thereafter. However, in this case, it is the first instance of the Prosecutor’s Office independently launching an investigation directly under the voluntary reporting system outlined in its “Guidelines on Criminal Leniency and Investigation Procedures for Cartel Cases.” The Prosecutor’s Office launched its own independent investigation concurrently with the KFTC investigation without waiting for the KFTC’s final decision and criminal referral, opting to request a criminal referral from the KFTC and proceed in indicting the companies and individuals involved.

Lee & Ko’s Antitrust and Competition Practice Group responded to the Prosecutor’s Office and KFTC investigations against Enex from the early stages of the investigations. In the investigation conducted by the Prosecutor’s Office, after careful consideration of the unique circumstances of the case, we acknowledged all relevant facts and actively cooperated with the investigation, while effectively arguing that furniture companies were in an inferior position compared with the construction companies accepting bids, forced to engage in fierce competition for minimal profits and participate in bidding to maintain eligibility for future bids even when they have no intention of winning the bid, which resulted in collusion. Based thereon, we secured a favorable decision that avoided the indictment of the CEO, an exceptional outcome compared with CEOs of other leading furniture companies whom were indicted. Furthermore, the number of indictments against working-level employees was also minimized. The first criminal trial is currently pending, and Lee & Ko’s Antitrust and Competition Practice Group is seeking to further reduce criminal sanctions.

Lee & Ko’s Antitrust and Competition Practice Group is also actively cooperating with the KFTC in its investigation. We are seeking to minimize the level of administrative sanctions by asserting that it is challenging to view the entire case as a single collusive act based on the facts and method of the alleged collusion, and due to the system of bidding on built-in furniture, it is difficult to determine that there was a clear restriction on competition.