Lookback period for repeat collusion extended from 5 to 10 years

All types of collusion, not just bid-rigging, to count toward penalty points

Rules take effect Jan. 1; public comment open until Oct. 12

The Korea Fair Trade Commission will extend the lookback period used to assess repeat collusion when requesting bans on public tender participation — from five years to 10 — and tighten the cumulative penalty-point threshold from "more than 5 points" to "4 points or more." The changes mean that penalty points from all types of collusion, not just bid-rigging, will count toward the threshold, bringing companies that have received two corrective orders within the scope of potential bidding bans.

The Korea Fair Trade Commission at Government Complex Sejong in Sejong [Newsis]
The Korea Fair Trade Commission at Government Complex Sejong in Sejong [Newsis]

The Fair Trade Commission announced Monday that it has drawn up an amendment to its guidelines on unfair collaborative acts in bidding and requests to restrict bidding eligibility, and will accept public comments through Oct. 12.

The core of the amendment is extending the period for assessing repeat collusion from the current five years to 10. It also expands the scope of penalty points to cover all types of collusion — not just bid-rigging — and lowers the cumulative point threshold that triggers a restriction request from "more than 5 points" to "4 points or more."

Under the current State Contracts Act, procuring agencies such as the Public Procurement Service may restrict a company's bidding eligibility upon request from the Fair Trade Commission. Penalty points by type of corrective measure are as follows: warning, 0.5 points; corrective recommendation, 1 point; corrective order, 2 points; surcharge, 2.5 points; and criminal referral, 3 points.

Under the revised rules, companies that repeatedly engage in types of collusion other than bid-rigging could also become subject to bidding restriction requests. Under the current standard, a company that receives surcharges on two separate occasions for collusion accumulates only 5 penalty points — falling short of the "more than 5 points" threshold.

Under the amendment, however, receiving just two corrective orders would bring a company to 4 cumulative points, making it subject to a restriction request. In effect, a company that receives a corrective order or harsher sanction for collusion and then receives another such sanction within 10 years could face a bidding ban.

The revised guidelines take effect Jan. 1. A transitional provision will apply the previous rules through the end of 2031 to restriction requests involving companies that accumulated penalty points before the new guidelines come into force.

The FTC will also rename the guidelines — previously titled the "Guidelines on Review of Unfair Collaborative Acts in Bidding" — to the "Guidelines on Unfair Collaborative Acts in Bidding and Requests to Restrict Bidding Eligibility," reflecting the expanded scope to cover restriction requests arising from all types of collusion, not just bid-rigging.

Because the current guidelines are set to expire June 30 next year, the FTC will rescind them and issue new guidelines in their place, extending the effective period through the end of 2029. Existing provisions setting out the types, substance, and review standards for bid-rigging will remain unchanged.

The FTC said it expects the changes to "deter repeat collusion by more strictly limiting the participation of repeat offenders in the public procurement market, while also contributing to establishing a fair competitive order in that market." After reviewing comments submitted during the public notice period, the commission plans to finalize and implement the amendment following deliberation and a vote by its full commission.


y2k@heraldcorp.com