[EDITORIALS]A poison in societyFourteen prestigious housing construction companies were fined 25.3 billion won ($21.7 million) by the Fair Trade Commission for fixing prices of new apartments. The companies had formed a “council” to discuss prices and payment methods before they sold apartment units under construction in the Dongbaek and Jukjeon areas of Yongin, Gyeonggi province. The result of price fixing is damage to customers. If there were competition among construction companies, more profits would have gone to the purchasers of the apartment units. But due to the price-fixing, the companies made excessive profits.
Price fixing, the chronic malady of construction companies, is also apparently prevalent in the sale of apartment units to ordinary people. Society is now trying to stabilize the price of housing, which is the basis of the people’s livelihood. The government is mobilizing powerful measures, such as levying high taxes and conducting tax investigations. The companies deserve blame for the illegal acts of raising apartment prices through price fixing despite the government efforts. The construction companies insist that their meeting was merely for “information exchange.” But it is not easy to accept that claim after looking at the similar prices and methods of payment.
It is also doubtful that the price fixing was limited only in the Dongbaek and Jukjeon districts. The government should thoroughly investigate whether there are such illegal acts in other places. Also, the government is responsible for the loose supervision that allowed such consultations. The public land sale system also needs to be corrected; companies are making windfall profits on government-developed land. The government should also ensure that proper taxes are being paid.
Recently, demands to reveal the building costs of apartment are getting stronger. Construction companies have opposed the demands, saying that it is contrary to market principles. We have taken that position for the same reason. But as long as unfair acts such as price fixing continue, such demands will not recede. If the industry wants to insist on market principles, fair competition should come first. Construction companies should know that price fixing is a poison that will kill the industry.