Four tablet makers face antitrust scrutiny over alleged bid-rigging in school supply contracts

Four tablet computer makers are set to face formal antitrust scrutiny after the Korea Fair Trade Commission found evidence they colluded on bids to supply devices to schools for digital textbook instruction. The affected bids totaled about 65 billion won ($48 million), with more than 200,000 tablets supplied through the rigged contracts.

The Fair Trade Commission's secretariat said Thursday it had submitted an examination report to the commission regarding alleged bid-rigging by four tablet computer manufacturers and distributors — Ibridge.com, Atec Computer, Uniwide and ForU Digital — in procurement tenders for digital textbook devices. The report will be sent to the four companies Friday, formally launching the review process to determine whether they violated the Fair Trade Act.

The examination report is a document prepared by FTC examiners that sets out the alleged conduct, its legal basis and recommended sanctions — the equivalent of a prosecutor's indictment. However, the findings in the report do not represent the commission's final conclusion. A final determination on whether the law was violated and the level of any sanctions will be made after an independent panel review.

Tablets for digital textbooks are devices that elementary, middle and high school students use in class to access digital textbooks and online learning software. Their widespread adoption began in 2020 as remote learning became common during the COVID-19 pandemic.

Unlike consumer tablets, these devices are procured in bulk by public institutions such as education offices and schools, which then lend them to students. Suppliers are selected through open bidding, with a single contract sometimes covering thousands to tens of thousands of units. Depending on the project, contracts may also include initial setup, software installation, peripheral equipment and ongoing maintenance.

FTC examiners concluded that the four companies systematically colluded on bids issued by education offices and other agencies for digital textbook tablets. The affected bids totaled about 65 billion won, with more than 200,000 tablets supplied through those contracts.

Examiners classified the conduct as bid-rigging constituting an "extremely serious violation." They recommended corrective measures including a cease-and-desist order, the imposition of fines, and criminal referral of the companies and their current and former executives.

The relevant sales figure used to calculate fines will be based on the approximately 65 billion won in affected bids, plus the sales attributed to companies that participated as sham bidders.

Applying the maximum surcharge rate of 15 percent — the ceiling for "extremely serious violations" at the time of the investigation — to the 65 billion won in affected bids alone would yield a base fine of up to 9.75 billion won, approaching 10 billion won. When the sales of sham bidders are factored in, some observers say the total fine could exceed 10 billion won. The actual fine, however, will be set by the commission after it confirms the relevant sales figure and applies any aggravating or mitigating factors.

The final determination on whether the law was violated and the specific level of sanctions will also be made through the commission's review process. The four companies have six weeks from the date they receive the examination report to submit written responses and may also request access to and copies of evidence. The FTC plans to convene a commission hearing to issue its final ruling as soon as the due-process procedures are complete.