South Korea's antitrust regulator fined 15 banks and brokerages a record 1.63 trillion won ($1.22 billion) combined for colluding in government bond auctions, saying they drove up the government's borrowing costs.
The Fair Trade Commission said Wednesday that 10 securities firms and five banks shared bidding information or agreed on bid yields and volumes from January 2020 to June 2023.
The penalties are the largest the commission has imposed in a single case, surpassing its 1.03 trillion won fine against Qualcomm in 2016 over the chipmaker's patent licensing practices.
KB Securities received the largest fine at 332.2 billion won, followed by NH Investment & Securities at 242.8 billion won and Mirae Asset Securities at 214.8 billion won. Industrial Bank of Korea faced the largest penalty among banks, at 135.8 billion won.
The commission based its calculations on about 54 trillion won in bond transactions affected by the collusion, applying a base rate of 4.5 percent.
The collusion involved 150 auctions, including 145 in which firms explicitly agreed on bid yields, the commission said. The companies accounted for 15 of the 18 government bond professional dealers operating at the time.
Professional dealers purchase government bonds and support trading. The firms coordinated their bids to prevent auction yields from falling, weakening competition that would otherwise reduce the government's interest costs, the commission said.
Employees exchanged information by telephone and messenger until one or two minutes before bidding closed. Some firms documented when and how to contact competitors and share bid information in handover documents and operating manuals, keeping the practice running through staff changes and absences.
The conduct "effectively neutralized the competitive bidding system and caused losses to state coffers," the commission said.
The commission also decided to refer Mirae Asset, NH Investment, KB, Kiwoom and Korea Investment & Securities, along with Industrial Bank of Korea and Korea Development Bank, to the Serious Crime Investigation Agency for criminal investigation, citing their longer involvement and participation in more affected auctions.
jwc@heraldcorp.com
