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The Fight against Bid-Riggings

Sung-Keun KIMDirector, International Cooperation Division Korea Fair Trade Commission

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Recent Updatesin the KFTC

• Establishment of Bid-Rigging Investigation Division

- The KFTC newly established Bid-Rigging Investigation Division in 2013

- After the establishment, the number of bid rigging cases has

increased dramatically

In 2014, the KFTC detected 48 cartel cases, most of which were bid

riggings, and imposed surcharges of more than one trillion won

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• Introduction of a system to predetermine the amount of damages to be compensated by bid-riggers

- This system requires bid participants to include obligatory damages clause to the contracts when they engage in rigging

- The system relieves burden of proof by public procurement agencies by allowing them to presume 10 percent of bidding price as damages

- Since 2010, the KFTC has encouraged public agencies to adopt the system and major public agencies including Korea Electric Power Corporation and Korea Railroad Corporation has the system in place

The KFTC’s experience to prevent bid-riggings

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• Strengthened cooperation with procurement agencies

- Before 2014, the level of cooperation stayed at the minimum

The procurement agencies requested the KFTC to investigate when bid rigging is suspected

- In 2014, the KFTC and 23 major public procurement agencies including the Public Procurement Service and Defense Acquisition Program Administration have established cooperative mechanism

The mechanism involves : adoption of BRIAS(Bid Rigging Indicator Analysis System); provision of education program to officials in charge of public procurement; and personnel exchange

The KFTC’s experience to prevent bid-riggings

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• Wider usage of BRIAS

- The system quantifies the likelihood of bid riggings by taking into

account bidding rates, number of bidders, bidding price and so on

- The system was developed by the KFTC in 2006 and has been

adopted by public agencies such as the Public Procurement Service,

Korea Electric Power Corporation and Korea Hydro & Nuclear Power

Corporation

The KFTC’s experience to prevent bid-riggings

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• Education program to prevent bid riggings

- The KFTC has developed education program to prevent bid riggings

for pubic procurement agency officers to enhance their awareness

upon bid rigging

- Recently the program is provided by the education institution run by

the Korea Public Procurement Service to officials in charge of

procurement

The KFTC’s experience to prevent bid-riggings

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• Personnel exchange

- To strengthen cooperative ties, the KFTC has exchanged its officials

with procurement agencies since 2013

- Officials of the KFTC are dispatched to procurement agency for

competition advocacy activities where officials of procurement

agency are dispatched to the KFTC to help investigation

The KFTC’s experience to prevent bid-riggings

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