South Korean security firms fined $730,000 for bid-rigging apartment contracts

South Korea's Fair Trade Commission has fined security firms S1 and ESTEC System a combined 973 million won for colluding on bids for integrated security services at 23 apartment complexes. S1, an affiliate of the Samsung Group, and ESTEC System, a former S1 spin-off, agreed to rig the tenders for contracts spanning November 2022 to January 2025.

The investigation revealed that the two companies pre-arranged the winning bidder and bid prices for 23 separate tenders in six regions, including Busan, Gwangju, and Daejeon. Integrated security services involve managing CCTV, access control systems, and personnel.

S1 reportedly asked ESTEC System to participate as a 'dummy bidder' to prevent tenders from failing or being canceled, as S1 anticipated a favorable outcome based on its prior business activities and proposal evaluations. ESTEC System, which had minimal experience in integrated security services in the relevant regions, was not a substantial competitor to S1.

Evidence suggests S1 employees assisted ESTEC System by preparing bid calculation documents. The commission cited the long-standing cooperative relationship between the two companies, stemming from ESTEC System's origins as an S1 spin-off, as a background factor in the collusion. As a result of the rigged bids, S1 secured 21 of the 23 tenders, with the remaining two going to a third party.