'Swarm Bidding Allegations' Against Daebang Construction... Denies Charges at First Trial, Claims 'No Unfair Support'

[Financial News] At the first trial, Koo Kyo-woon, chairman of Daebang Construction, and his eldest son, CEO Gu Chan-woo, completely denied allegations that Daebang Construction unfairly supported affiliates and the company owned by the owner's children by transferring public housing sites acquired through 'swarm bidding.'
Swarm bidding refers to a tactic where affiliates are mobilized to artificially raise competition in bids. Prosecutors allege that Daebang Construction secured land using this method and then funneled it to companies owned by the chairman's children and affiliates.
On the 10th, Yun Young-su, the single judge of Seoul Central District Court Criminal Division 18, presided over the first trial of Chairman Koo and CEO Gu, who were indicted for violating the Monopoly Regulation and Fair Trade Act. CEO Gu appeared in court as the legal representative of Daebang Construction.
Prosecutors argued that the two conspired to have Daebang Construction resell a large number of public housing sites to affiliates such as Daebang Industrial Development since 2014, resulting in a 151-rank jump in the affiliates' construction capability ranking and providing 'excessive economic benefits.' They claimed this structure undermined fair competition in the construction market.
Daebang Construction countered that the transactions were normal and conducted at appropriate prices, insisting there was no unfair support. They also argued that some acts were beyond the statute of limitations and that applying the 'single comprehensive offense' was unjustified.
The court also expressed doubt about the application of the single comprehensive offense. The judge noted, 'The locations of the alleged crimes differ, and the dates span five years. There are significant gaps between the dates of winning bids and resales, and the implementation dates also vary. It is questionable to consider all these as a single comprehensive offense simply because they involve affiliates.'
Daebang Construction stated it would submit the judgment from the related administrative lawsuit as evidence in the criminal trial after the ruling is issued. The next trial is scheduled for March 9 next year. On that day, Daebang Construction plans to deliver its closing argument in the form of a 15-minute presentation (PT).
Previously, the Korea Fair Trade Commission (KFTC) imposed a fine of 20.5 billion won on Daebang Construction in February, claiming it secured 250.1 billion won in development profits by reselling public housing sites to affiliates, and referred Chairman Koo to the prosecution. Daebang Industrial Development's construction capability ranking soared from 228th in 2014 to 77th in 2024. In May, the Seoul Central District Prosecutors' Office indicted Chairman Koo without detention and concluded, along with CEO Gu Chan-woo, that Daebang Construction unfairly supported affiliates by transferring six public housing sites in areas such as Magok and Dongtan.
Meanwhile, the administrative lawsuit filed by Chairman Koo seeking to overturn the KFTC's corrective order will conclude its hearings on December 18. In a related case, Hoban Construction previously had 36.5 billion won of a 60.8 billion won KFTC fine canceled by the Supreme Court in a lawsuit over swarm bidding.
scottchoi15@fnnews.com Choi Eun-sol Reporter