Administrative Law

Bid-Rigging Lawyer

Bid-Rigging Lawyer | Understanding the Criminal, Administrative and Debarment Tracks Together

Summary

Bid-rigging (collusion in a competitive tender) is regulated as both a criminal offense and an administrative violation. Under the Monopoly Regulation and Fair Trade Act, agreeing with a competitor on price, the winning bidder, or bid quantities in a tender or auction is an unfair collusive act, and the Fair Trade Commission can issue a corrective order and impose a surcharge (독점규제 및 공정거래에 관한 법률 제40조, 제43조). The same conduct can also constitute a criminal offense (독점규제 및 공정거래에 관한 법률 제124조), and separately trigger public-tender debarment under the Act on Contracts to Which the State Is a Party (국가를 당사자로 하는 계약에 관한 법률 제27조). Because these three proceedings run on different timelines and different evidentiary standards, a statement made in one can be used against the company in another.

Administrative · Criminal Related law: Monopoly Regulation and Fair Trade Act FTC investigation Public procurement debarment

Bid-Rigging | What Counts as Bid-Rigging Under the Law

Bid-rigging is not a single offense but a set of related legal grounds spread across competition law, criminal law and public procurement law. Which grounds apply changes both the burden of proof and the available defenses.

Art. 40

Unfair Collusive Act (Fair Trade Act)
Agreeing with another bidder in advance on price, the winning party, or the allocation of quantities in a tender or auction is treated as a collusive act restricting competition (독점규제 및 공정거래에 관한 법률 제40조 제1항 제8호). The FTC does not need to prove actual harm to the tender outcome — an agreement with the object or effect of restricting competition is enough.

Art. 43

Corrective Order and Surcharge
Once collusion is found, the FTC can order the company to cease the conduct, publish a correction notice, and impose a surcharge calculated as a percentage of related sales (독점규제 및 공정거래에 관한 법률 제43조). The surcharge amount is often the most contested part of the case because it depends on how 'related sales' are defined.

Art. 124

Criminal Liability
A person who commits an unfair collusive act such as bid-rigging can be criminally prosecuted, and imprisonment or a fine may be imposed (독점규제 및 공정거래에 관한 법률 제124조 제1항). Since 2020 reforms, prosecutors can proceed even without a referral from the FTC in certain circumstances, though FTC referral practice still matters in most cases.

Art. 27

Restriction on Participation in Tenders
A public contracting agency can bar a company found to have engaged in collusion from participating in public tenders for a set period (국가를 당사자로 하는 계약에 관한 법률 제27조). This debarment is an administrative sanction separate from any FTC or criminal finding, and can be imposed even while the criminal case is still pending.

Art. 19

Leniency (Reduction for Voluntary Report)
A company that voluntarily reports its own collusive conduct to the FTC and cooperates with the investigation may receive a reduction or exemption from the surcharge (독점규제 및 공정거래에 관한 법률 제44조). Whether and when to apply for leniency is one of the most consequential strategic decisions in a bid-rigging case, since it affects both the FTC and criminal exposure.

Overlap and Timing Issues

Because the FTC investigation, the criminal investigation, and the debarment procedure are run by different bodies with different legal standards, a company can face a corrective order even where a criminal charge is later dropped, or vice versa. Statements and documents submitted to the FTC in a leniency application can also surface later in the criminal file, so the sequencing of responses across all three tracks needs to be planned together rather than case by case.

Bid-Rigging | The Criminal Investigation Track

In the criminal track, prosecutors examine whether there was an actual agreement between bidders and whether the defendant knowingly participated in it. This is decided independently of whatever the FTC concludes.

What Investigators Look For

Prosecutors typically focus on communication records, meeting logs, and bid documents to establish that a prior agreement existed on price or the winning bidder (독점규제 및 공정거래에 관한 법률 제124조 제1항). Circumstantial evidence such as unusually similar bid prices or a pattern of rotating winners is often used to infer an agreement even without a written record.

Individual vs. Corporate Liability

Both the individual employee who executed the agreement and the company itself can be prosecuted, since the Fair Trade Act allows for corporate criminal liability alongside individual liability unless the company can show it exercised due care to prevent the violation. Distinguishing an employee's independent decision from a company-directed scheme is frequently a central defense issue.

Interaction With FTC Referral

Historically, most bid-rigging prosecutions proceeded after a referral from the FTC, but recent statutory changes allow prosecutors more room to act on their own initiative in serious cases. This means a company can no longer assume that cooperating fully with the FTC will delay or avoid criminal exposure.

Bid-Rigging | The FTC Corrective Order and Surcharge Track

The FTC proceeding is an administrative process, but its findings and surcharge calculations often become the factual backbone that other proceedings rely on. Responding effectively here has consequences well beyond the surcharge itself.

Scope of 'Related Sales'

The surcharge under Article 43 is calculated based on sales related to the collusive conduct, and disputes frequently arise over which contracts, time periods, or product lines should be included in that base. A narrower related-sales calculation can substantially reduce the surcharge even where the finding of collusion itself is not contested.

Leniency Strategy

Applying for leniency under Article 44 can reduce or eliminate the surcharge, but it requires disclosing internal evidence of the agreement, which can also be used in a later criminal case unless carefully managed. The timing of a leniency application relative to other companies involved in the same tender is often decisive, since only a limited number of early applicants receive the largest reductions.

Administrative Litigation After the Order

A corrective order or surcharge decision can be challenged before the Seoul High Court, which has exclusive first-instance jurisdiction over Fair Trade Act appeals (독점규제 및 공정거래에 관한 법률 제99조). Whether to contest the underlying finding of collusion, or only the surcharge calculation, changes the scope and cost of the litigation significantly.

Bid-Rigging | Public Procurement Debarment

Even after the FTC and criminal proceedings conclude, a separate debarment decision by the contracting agency can shut a company out of public contracts for a defined period, which is often the most damaging practical consequence.

Grounds and Duration

A contracting agency can restrict a company's participation in public tenders for up to two years depending on the severity of the collusion found (국가를 당사자로 하는 계약에 관한 법률 제27조). The duration is set based on internal guidelines that weigh factors such as the scale of the contract and whether the company voluntarily reported the conduct.

Challenging a Debarment Decision

A debarment notice can be challenged through an administrative appeal or litigation seeking to suspend its effect, since an immediate bar from all public tenders can be disproportionate to smaller violations. Because debarment can be based on the same facts found in the FTC decision, the outcome of any pending FTC litigation is often relevant evidence in the debarment dispute.

Bid-Rigging | From Initial Contact to Resolution Across All Three Tracks

Initial Case Review
We review the tender documents, any FTC investigation notice or search warrant, and internal communications to map out which of the three tracks (criminal, FTC, debarment) are already open or likely to open.

Evidence Preservation and Internal Fact-Finding
Before responding to any investigator, we work with the company to preserve relevant records and reconstruct an accurate internal timeline, since inconsistent statements across agencies create serious credibility problems later.

Leniency and Response Strategy Decision
A decision is made on whether to apply for FTC leniency, how to respond to prosecutorial questioning, and how these choices affect each other — this is typically the most time-sensitive stage.

Representation in Investigation and Hearings
We represent the company or individual in FTC hearings, prosecutorial interviews, and any court proceedings, coordinating the position taken across agencies so that statements remain consistent.

Litigation or Appeal
If a corrective order, surcharge, criminal judgment, or debarment decision is unfavorable, we assess the grounds for administrative litigation or criminal appeal and pursue the ones with realistic prospects.

Bid-Rigging | How Fees Are Determined

Retainer Fee
The retainer is generally set based on which tracks are involved (FTC only, criminal only, or both) and the complexity of the tender at issue, since a combined case requires coordinated work across two or three proceedings.

Success Fee
Where applicable, a success fee may be structured around measurable outcomes such as a reduced surcharge, a favorable criminal disposition, or a shortened debarment period, agreed on in advance and set out in the engagement agreement.

Disbursements
Costs such as expert opinions on surcharge calculation, document translation, or expedited record requests are billed separately as actual expenses incurred.

Multi-Track Coordination Fee
Because FTC, criminal, and debarment proceedings often require parallel filings and hearings, fee estimates account for the additional coordination work needed to keep the company's position consistent across all three.

※ Costs vary depending on case complexity and specific circumstances; exact fees will be provided during consultation. No specific outcome is guaranteed.

Bid-Rigging | Self-Check Before You Respond

1️⃣ Have You Received an FTC Investigation Notice?

Does the notice specify which tender or contract period is under review?
Have you identified which employees had contact with competing bidders during that period?
Have you preserved relevant emails, messenger logs, and bid documents without alteration?
Are you clear on the deadline to submit a written response or supporting materials?

2️⃣ Are You Facing a Criminal Summons or Search?

Has a specific individual been named as a suspect, or is the company itself the target?
Have you confirmed whether any employee has already given a statement without counsel present?
Do you understand the difference between voluntary appearance and a formal summons?
Have you checked whether the case may have started from an FTC referral or a separate tip?

3️⃣ Considering an FTC Leniency Application?

Do you know whether another company involved in the same tender may apply first?
Have you assessed what internal evidence the application would require you to disclose?
Have you considered how a leniency filing could affect a pending or future criminal case?
Is there a realistic chance of a full exemption, or only a partial reduction?

4️⃣ Facing Public Tender Debarment?

Has the contracting agency issued a formal debarment notice, or only a warning?
Do you know the proposed duration and its legal basis?
Have you checked whether an application to suspend the debarment's effect is available?
Would the debarment period overlap with contracts your company already committed to bid on?

Frequently Asked Questions

Q. Can I be criminally prosecuted for bid-rigging even if the FTC has not yet issued a corrective order?

A. Yes. Since statutory reforms expanded prosecutors' ability to act without waiting for an FTC referral in certain cases, a criminal investigation can proceed on a separate timeline from the FTC's administrative process (독점규제 및 공정거래에 관한 법률 제124조). This is why the two tracks need to be managed together rather than assuming one will wait for the other.

Q. If my company applies for FTC leniency, does that protect me from criminal liability too?

A. Not automatically. A leniency application under Article 44 can reduce or eliminate the surcharge in the FTC proceeding, but it does not by itself grant immunity in a criminal case, and the disclosed evidence can potentially be referenced later by investigators. Whether and how to apply for leniency should be decided with both tracks in mind.

Q. How long can my company be barred from public tenders?

A. The debarment period depends on the severity of the conduct and internal guidelines applied by the contracting agency, and can extend up to roughly two years under the relevant framework (국가를 당사자로 하는 계약에 관한 법률 제27조). The specific duration and any grounds for reduction depend heavily on the facts of the case.

Q. What is considered evidence of 'collusion' if there is no written agreement?

A. Investigators often rely on circumstantial evidence such as unusually similar bid prices, a rotating pattern among the same group of bidders, or informal communications shortly before a tender. Whether this circumstantial evidence is sufficient to establish an agreement is frequently the central factual dispute in these cases.

Q. Can the surcharge amount be challenged separately from the finding of collusion?

A. Yes. Even if a company does not contest that collusion occurred, it can still challenge how the FTC calculated 'related sales' under Article 43, which directly determines the surcharge amount. This is often a more realistic litigation strategy than contesting the underlying finding itself.

Q. Does a corrective order from the FTC automatically mean I will be found guilty in the criminal case?

A. No. The FTC's finding is made under an administrative standard and is not binding on the criminal court, which applies its own standard of proof. That said, the factual record built in the FTC proceeding is often referenced by prosecutors, so an unfavorable FTC finding can still make the criminal defense more difficult in practice.

Q. What should I do if I receive a request for a statement from the FTC or police?

A. It generally helps to confirm the scope of the request, avoid speculative or inconsistent statements, and consult with counsel before giving a formal statement, since anything said in one proceeding can resurface in another. This is particularly important because the FTC, prosecution, and contracting agency do not always coordinate their timelines.

Q. Is a subcontractor or joint venture partner exposed to the same liability?

A. It depends on whether the subcontractor or partner had actual knowledge of or participated in the collusive arrangement, which is assessed separately for each party involved in the tender. A party with only a peripheral role may have a different level of exposure than the party that organized the agreement.

Q. How long does a combined FTC and criminal bid-rigging case typically take to resolve?

A. Timelines vary widely depending on the complexity of the tender, the number of parties involved, and whether the corrective order is appealed to the Seoul High Court, but combined cases involving multiple tracks generally take longer than a single-track case. Early planning of the response strategy can help avoid unnecessary delays in any one track.

Official References

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