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GS Engineering, Daewoo Shipbuilding can bid for public projects: court

All Headlines 11:41 June 10, 2019

By Kim Kwang-tae

SEJONG, June 10 (Yonhap) -- A Seoul court has ruled in favor of GS Engineering & Construction Co. and Daewoo Shipbuilding & Marine Engineering Co. over their requests that bidding restrictions for public projects be suspended, company officials said Monday.

The Seoul High Court made the decision in May, clearing the obstacles for the two companies to bid for public projects for about three or four years until the Supreme Court issues a final ruling, they said.

The court said the suspension of bidding restrictions is necessary to prevent irreparable damages to Daewoo Shipbuilding & Marine Engineering, according to Daewoo Shipbuilding.

In April, the Fair Trade Commission (FTC) asked the government to ban GS Engineering & Construction Co., a major local builder, from bidding for public projects as punishment for violating the country's subcontracting law.

Under the law, the central government and provincial authorities are required to impose bidding restrictions on a violator for up to two years as soon as requested by the South Korean antitrust regulator.

GS Engineering is accused of delaying the issuance of written contracts and payments to its subcontractors in 2017, which raised its cumulative number of penalty points to seven, according to the regulator.

The bidding restrictions take effect if cumulative penalty points exceed five.

GS Engineering has filed for administrative litigation to overturn the commission's decision, claiming that there is a factor that can reduce its penalty points to five. The major builder also sought a suspension for bidding restrictions.

In December, the FTC fined Daewoo Shipbuilding 10.8 billion won (US$9.6 million) for violating laws on subcontracting as it referred the company to prosecutors for further investigation.

The world's second-biggest shipbuilder by sales is accused of not having delivered contract documents to 27 subcontractors before they began their work, according to the commission.

The FTC also said Daewoo Shipbuilding unilaterally decided to lower contract prices for the subcontractors between 2013 and 2016.

Daewoo Shipbuilding has also filed an administrative lawsuit against the antitrust watchdog seeking to nullify the fine, calling the FTC's decision "disputable."

In 2013, the FTC slapped a fine of 26.7 billion won on Daewoo Shipbuilding for unilaterally cutting prices in deals with 89 smaller subcontractors for assembling, painting and other work related to building ships.

But the Supreme Court ruled in favor of Daewoo Shipbuilding in December 2017, and the money was returned to the shipbuilder, according to the company.

GS Engineering, Daewoo Shipbuilding can bid for public projects: court - 1

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