South Korea's competition watchdog says ten brokerages and five banks rigged government bond auctions for three years, pushing up state borrowing costs.
South Korea's Fair Trade Commission has fined 15 financial companies a combined US$1.2 billion (1.62 trillion won) for colluding in auctions of government bonds, Yonhap and The Korea Herald reported on Wednesday, 11 November. The Korea Herald put the total at US$1.2 billion (1.63 trillion won).
According to the commission, the companies, ten brokerages and five banks that act as primary dealers in the government bond market, told one another the yields and volumes they planned to bid in 150 auctions held between January 2020 and June 2023. In 145 of those auctions, the regulator said, the contact went beyond sharing information to agreeing specific yields or volumes, which it treats as bid rigging. Yonhap reported that the dealers talked by phone and messaging app, and that contact details for counterparts at rival firms were passed to successors, in some cases written into desk manuals.
The commission said the practice lifted auction yields by limiting competition, which raised what the government pays to borrow. Because government bonds are the benchmark for pricing other financial products and setting interest rates, it called the collusion a serious violation and said it would keep enforcing the law against bid rigging in the public sector.
The penalty is the commission's largest in a single case, ahead of the US$741 million (1.03 trillion won) fine imposed on Qualcomm in 2016. KB Securities received the biggest individual fine, about US$238.8 million (332 billion won), followed by NH Investment & Securities at about US$174.8 million (243 billion won). Yonhap reported that seven of the firms, Mirae Asset Securities, NH Investment & Securities, Industrial Bank of Korea, KB Securities, Kiwoom Securities, the Korea Development Bank and Korea Investment & Securities, are being referred to the Serious Crime Investigation Agency.
