8 firms, 14 suspects indicted in W2.3tr home furniture bid rigging

Lee Jung-sup, a senior prosecutor in the antitrust division of the Seoul Central District Prosecutors' Office, speaks to reporters in a briefing held at the Seoul High Prosecutors' Office on Thursday. (Yonhap)

South Korea's prosecution service on Thursday indicted eight home furniture manufacturing companies and 14 individuals for undermining fair competition in related bids.

Such anti-competitive activities allegedly took place in some 780 apartment construction projects spanning nine years until 2022, bringing the total volume of the furniture projects to 2.3 trillion won ($1.73 billion), according to the Seoul Central District Prosecutors' Office.

The eight companies, including Hanssem, Hanssem Nexus, Enex and Neps, as well as former Hanssem Chairman Choi Yang-ha and 11 other high-ranking executives, are facing charges of violating the Fair Trade Act and the Framework Act on the Construction Industry. Two more individuals allegedly destroyed evidence. None of the indicted are to be detained.

They allegedly rigged bids for built-in home furniture and kitchens in new apartments, by reaching agreements behind closed doors on which would win bids at which price in advance. The companies took turns winning the business.

Such long-standing malpractice in the furniture industry is thought to have been a main culprit behind surging prices of newly built apartments that have left ordinary people frustrated in their attempt to buy a home, Lee Jung-sup, a senior prosecutor at the antitrust division of the Seoul Central District Prosecutors' Office, told reporters at a briefing in Seoul.

Promotional image of a kitchen decoration (Hanssem)

Among the 780 construction projects were reconstruction plans to build upscale apartment complexes, including Lotte World Tower's Signiel Residences, Daechi Prugio Summit and Gaepo Xi Presidence.

The news comes months after the prosecution raided the offices of furniture and kitchen furnishing firms in February. The prosecution service has teamed up with anti-competition authorities here for the administrative investigation into the case, it said in a statement.

It was the first time the prosecution investigated and indicted bid rigging suspects without an accusation first from the Fair Trade Commission, according to the prosecution.

It also noted that its leniency program came into practice for the first time, eventually acquitting one of the companies involved -- Hyundai Livart -- since the policy was in effect in December 2020.

By Son Ji-hyoung(consnow@heraldcorp.com)