Bringing Apartment Price Conspirators to Justice for the First Time

Fourteen construction companies were found out to have conspired to settle their installment sales prices while providing their apartment buildings to consumers by the Fair Trade Commission. They were fined 25.3 billion won in total. This is the first time that an apartment price collusion scheme has been revealed, which will likely bring about vast ramifications, such as apartment buyers, one after another, filing law suits against the companies.

The commission announced on June 10 that they have decided to fine the fourteen construction companies that were found to have colluded with each other to decide the sales prices of apartments built in housing development zones called Dongbaek and Jukjon in Yongin, Gyeonggi. It also ordered the companies to correct the practice and to announce it in newspapers.

According to the commission, 10 construction companies that opened their apartment buildings in the area last July, including Halla Construction Co. and Seohae Construction Co., organized the “Yongin Dongbaek Zone Cooperative Body.” They held dozens of meetings and agreed on an installment sales price of seven million won per pyong and conditions of midway payment and interest as future payments.

Also, six construction companies, including Geonyoung, Bando, and the same two companies from Dongbaek, were found to have colluded to set the price at 6.5 million won per pyong in the Jukjon area, according to the commission.

These prices are much higher than the average market prices for apartments in the area, with Dongbaek’s 6.7 million won for a 34-pyong apartment and Jukjon’s 5.5 million one for a 50-pyong apartment.

The apartments put up for installment sales by the companies number more than 11,000 units, with 8,554 units in Dongbaek and 2,635 units in Jukjon.

With the commission’s decision, the buyers of the apartments will take action such as filing indemnity law suits.

Park Il-min, head of the apartment buyers’ committee the in Dongbaek, said, “We will file indemnity suits against the companies who have profiteered and start up a negotiation to lower the price with others after the written resolution is publicized by the Fair Trade Commission.” However, the construction companies say that they feel the decision by the commission is “unjust” and they plan to file a protest and administrative litigation.

A related official at A company said, “The construction companies generally coordinate their business plans and their advertisements for apartments together when they are being put up for sale at the same time, and coordination on the installment price can be part of it,” and added, “It is unjust to call it collusion only by its probability.”

Chi-Young Shin Eun-Woo Lee higgledy@donga.com libra@donga.com