Two on-site inspections of Woojin Industrial Systems by the Fair Trade Commission have yielded no apparent evidence of bid-rigging, according to an industry source familiar with the matter Monday.
The FTC launched an investigation into Woojin, Korea's second-largest railway vehicle manufacturer, and at least one other parts supplier on Oct. 21 over suspected collusion in railway parts procurement tenders.
"Neither of the two inspections at Woojin thus far has turned up evidence of wrongdoing," the source, who asked not to be identified, said.
The investigation focuses on a business that has become a relatively small part of Woojin's operations as the company has shifted from railway components to finished trains.
Founded as a railway parts manufacturer in 1974, Woojin entered the rolling stock market in the 2010s, expanding into higher-value vehicle contracts.
Domestic parts sales now account for about 5 percent of its total revenue, or less than 10 percent including overseas sales.
"Since Woojin has moved almost entirely to finished vehicles, parts tenders hardly matter to it," the source said.
Unlike Korea's railway vehicle manufacturing market, which is dominated by a handful of companies, the parts sector is more fragmented, with numerous suppliers competing for smaller contracts.
The source argued that Woojin's limited exposure to parts tenders and established manufacturing capabilities give it little incentive to engage in collusion.
"Collusion is something companies do when they struggle to win bids on their own or want to inflate prices," the source said. "Woojin has no reason to do either."
Woojin now participates mainly in parts tenders involving maintenance or upgrades of trains it previously manufactured. In some cases, its proprietary technology makes it the only qualified supplier, according to the source.
The source also cited Woojin's decades of experience in railway components as a competitive advantage over smaller suppliers.
The FTC has not announced any findings or indicated when its investigation might conclude. The regulator declined to comment on the ongoing investigation.
minmin@heraldcorp.com
