Korea’s prosecutors probe furniture firms on alleged $1.53 billion price fixing

[Photo by Park Hyung-ki]

South Korean prosecutors have found that domestic furniture companies allegedly colluded to fix their bidding prices on contracts put forward by local construction firms for built-in furniture in new apartment complexes worth more than 2 trillion won ($1.53 billion), raising concern that they have passed on the cost to consumers.

It was learned on Wednesday that the Seoul Central District Prosecutors Office has been investigating 10 major furniture firms, including Hanssem Co., Hyundai Livart Furniture Co., Enex Co., Nexis Co. and UAMI Co. for violating the Monopoly Regulation and Fair Trade Act and the Framework Act on the Construction Industry after detecting circumstantial evidence that these companies have engaged in large-scale price-fixing for bids to supply built-in furniture. The alleged collusion has continued since 2014 in many projects.

Prosecutors initially estimated the amount of collusion to be 1.3 trillion won, but the amount nearly doubled as construction firms were investigated together. The prosecution saw their price-fixing as serious as they have been found to have colluded on most contracts put forward by large construction companies building new apartments.

“There are many factors in raising new apartment prices, but if there was a price-fixing worth 2 trillion won, it would have increased the prices,” Kim In-man, head of the Real Estate Economic Research Institute.

Earlier, prosecutors raided the offices of nine furniture companies in the Seoul metropolitan area on Feb. 1 and has been calling in former and current executives of these companies, including former Hanssem Chairman Choi Yang-ha. Most of them are said to have admitted to the collusion.

Prosecutors are expected to complete the investigation in the middle of next month and request the Fair Trade Commission to file a complaint against Choi and others.