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Seoul High Court Revokes KFTC’s Sanctions Against Global Bank for Alleged Bid Rigging


Kim & Chang represented a global bank (the “Complainant”) in its successful appeal before the Seoul High Court of a corrective order and administrative fine imposed by the Korea Fair Trade Commission (the “KFTC”) for alleged bid rigging with another global bank (“Bank X”) to process a transaction for a public corporation (the “Transaction”) by agreeing with Bank X that Bank X would not participate in a bid (through discussions between employees of the two banks, hereafter, the “Discussions”) concerning cross-currency interest rate swaps, after which Bank X acted on the agreement.

The key issues in this case were (i) whether the public corporation selected the bank that would process the Transaction through a bidding, and if so (ii) whether the Discussions could be seen as an agreement between the banks on who would be the winning bidder.  Representing the Complainant both at the time of the KFTC’s investigation and throughout the subsequent litigation process, our team effectively argued that neither was true because: (i) the public corporation had entrusted the Transaction to the Complainant based on a private agreement, rather than through a  bidding; (ii) the alleged bidding documents submitted by the banks after the Transaction were a mere formality to create the appearance of a formal bidding process (for internal administrative purposes), which meant that the process of selecting the Complainant for the Transaction, in substance, was not a competitive bidding process; and (iii) it would be difficult to take the view that Bank X was qualified to participate in the Transaction in the first place, which meant the Discussions could not amount to unfair concerted activity between prospective bidders to agree on the winning bidder.

By explaining in detail the characteristics of the private agreement between the public corporation and the Complainant, as well as the process through which the private agreement was concluded, our team was able to demonstrate that there was no competitive bidding involved in the first place that could have been subject to bid rigging by the banks.  Furthermore we were able to demonstrate that the public corporation did not grant Bank X the opportunity to participate in the alleged bidding.  By leveraging our extensive experience in successfully advising clients in major bid rigging cases as well as in-depth knowledge of how cross-currency interest rate swap transactions are structured and conducted, our team successfully persuaded the Seoul High Court to rule in favor of the Complainant by completely overturning the KFTC’s corrective order and administrative fine.