South Korean firm pays $2 million over fuel contract bid-rigging scheme

by Ben Vernia | April 10th, 2020

On April 8, the Department of Justice announced that a South Korean fuel contractor will pay $2 million to settle bid-rigging and False Claims Act allegations, the final in a series of antitrust and fraud settlements reached in an investigation of Department of Defense contracts for fuel. According to DOJ’s press release:

South Korea-based company Jier Shin Korea Co. Ltd., and its president, Sang Joo Lee, have agreed to pay $2 million to the United States for civil antitrust and False Claims Act violations for their involvement in a bid-rigging conspiracy that targeted contracts to supply fuel to U.S. military bases in South Korea, the Department of Justice announced today. 

The United States previously reached civil settlements totaling over $205 million relating to the conspiracy with GS Caltex Corporation, Hanjin Transportation Co. Ltd., Hyundai Oilbank Co. Ltd., SK Energy Co. Ltd., and S-Oil Corporation.  As with the prior civil settlements, this settlement reflects the important role of both Section 4A of the Clayton Act and the False Claims Act to ensure that the United States is compensated when it is the victim of anticompetitive conduct. 

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The Department’s Antitrust Division today filed a civil antitrust complaint in the U.S. District Court for the Southern District of Ohio and, at the same time, filed a proposed settlement that, if approved by the court, would resolve the lawsuit against Jier Shin Korea and Mr. Lee for their anticompetitive conduct targeting the U.S. military in South Korea.  The proposed settlement requires that Jier Shin Korea and Mr. Lee pay $2 million to the United States to resolve the civil antitrust violations.  In addition, Jier Shin Korea and Mr. Lee have agreed to continue to cooperate with the United States’ civil investigations and to abide by an antitrust compliance program.  The amount to be paid by Jier Shin Korea and Mr. Lee reflects the value of their cooperation, limitations on their ability to pay, and cost savings realized by avoiding extended litigation.  The settlement further provides that the United States, if it discovers any material misrepresentations in the financial statements provided by Jier Shin Korea and Mr. Lee regarding their ability to pay, may recover the full amount by which Jier Shin Korea or Mr. Lee understated that ability.

The payment will also resolve civil claims that the United States has under the False Claims Act against Jier Shin Korea and Mr. Lee for making false statements to the government in connection with their agreement not to compete.  The Civil Division has entered into a separate settlement agreement with Jier Shin Korea and Mr. Lee to resolve these claims.

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The case apparently arose from a government investigation, and not from a whistleblower’s lawsuit.

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