Ten school uniform suppliers that engaged in bid-rigging for procurement tenders issued by middle and high schools in Yongin, Gyeonggi Province; Ulsan; and Yeongcheon, North Gyeongsang Province, are facing sanctions from the Fair Trade Commission (FTC).

The FTC announced today (October 13) that it has decided to issue corrective orders and impose a total of 102 million won in fines regarding allegations of pre-arranging successful bidders and bidding prices across a total of 51 school uniform purchase tenders issued by 19 middle and high schools in Giheung and Cheoin districts of Yongin, Ulsan, and Yeongcheon.

The subjects of the sanctions are Smart Uniform Yongin Branch, IVYCLUB Yongin Branch, Elite Uniform Yongin Branch, Ssenten Uniform Yongin Branch, Skoolooks Giheung Branch, and Smart Uniform Singal Branch (all in Yongin); IVYCLUB Ulsan Nam-gu Branch and Smart Uniform Nam-gu Branch (both in Ulsan); and Smart Uniform Yeongcheon Branch and Elite Uniform Yeongcheon Branch (both in Yeongcheon).

School uniform purchase tenders are conducted under the "School-Managed Uniform Purchase System," where each school supervises the process, and the school principal selects a supplier through bidding to collectively provide uniforms to students.

The structure involves provincial and metropolitan office of education councils setting and notifying upper price limits for school uniforms every year, after which schools generally select suppliers through simultaneous specification and price bidding within a range that does not exceed the upper limit.

Specifically, four agencies—Smart Uniform Yongin Branch, IVYCLUB Yongin Branch, Elite Uniform Yongin Branch, and Ssenten Uniform Yongin Branch—were found to have agreed on successful bidders and bidding prices and carried them out in 15 school uniform purchase tenders issued by eight middle and high schools in Cheoin-gu, Yongin, from September 2022 to October of last year.

The FTC deemed their collusion a "serious violation of the law" and issued corrective orders along with a total of 72 million won in fines.

Smart Uniform Yongin Branch, a business that has operated in the region for a long time, was confirmed to have requested other businesses to participate as decoys to prevent failed bids in three tenders in 2022.

Starting in 2023, Smart Uniform Yongin Branch was found to have notified other businesses via text messages of the list of schools hoping to secure successful bids and requested cooperation in order to prevent low-price contract awards and secure target volumes.

Other agencies accepted the cooperation request from Smart Uniform Yongin Branch and even pre-agreed on bidding prices in some tenders.

As a result, they were able to conclude contracts at a high successful bid rate averaging 98.29% compared to the estimated price.

An FTC official explained, "School uniform bidding has no lower limit, so prices could have been formed lower," adding, "In 2021, when there was no bid-rigging, the successful bid rate compared to the estimated price was 90.08%, but [due to collusion] it increased by 8 percentage points (p), which likely had some impact on consumer prices."

In Giheung-gu, Yongin, two businesses—Skoolooks Giheung Branch and Smart Uniform Singal Branch—were confirmed to have engaged in bid-rigging by agreeing on a successful bidder and bidding prices in a school uniform purchase tender issued by one middle school in August of last year, and received corrective orders.

In Nam-gu, Ulsan as well, two businesses—IVYCLUB Ulsan Nam-gu Branch and Smart Uniform Ulsan Nam-gu Branch—were caught agreeing on and executing successful bidders and bidding prices in six school uniform purchase tenders issued by six middle and high schools from September 2022 to November 2024, receiving corrective orders and a total of 9 million won in fines.

In Yeongcheon, two businesses—Smart Uniform Yeongcheon Branch and Elite Uniform Yeongcheon Branch—were found to have colluded in 29 school uniform purchase tenders issued by four middle and high schools from October 2018 to December of last year, and received corrective orders along with a total of 21 million won in fines.

The former representatives of the two businesses met at a school uniform sample presentation hosted by a high school in 2018 and were found to have agreed to avoid competition and divide up schools to win bids, given that there were only two brand uniform businesses in the region.

They established a "successful bid rotation system" where winning sequences were set for three schools scheduled for bidding, with the business that failed in the immediate previous bidding winning the next one for each school.

Even after the representatives of the uniform agencies changed, the new representatives continued this secret agreement, and starting in 2019, the schools targeted for collusion expanded to four.

The FTC has uncovered and sanctioned a total of 52 cases of school uniform bid-rigging nationwide, including in Seoul, Gyeonggi, Daegu, and Gwangju, from 2010 to the present.

In April of this year, the FTC revised its fine notification to significantly raise the lower limit of the fine imposition standard rate and heavily sanction repeat collusion businesses, with the policy of further enhancing the effectiveness of economic sanctions on collusion cases uncovered moving forward.

In addition, in consultation with provincial and metropolitan offices of education nationwide, school uniform bidding information is being linked with the Bid-Rigging Indicator Analysis System operated by the FTC to intensively monitor signs of collusion among school uniform agencies.

The policy is to initiate ex officio investigations and closely verify whether laws have been violated if cases suspected of collusion arise.

(Photo: Provided by Yonhap News TV, Yonhap News)