Fair Trade Commission Initiates Sanctions Against 10 Lubricant Manufacturers for 2 Trillion Won Price-Fixing Scheme

Ten lubricant manufacturing and sales companies are set to face the Fair Trade Commission (FTC) over allegations of price-fixing and bid-rigging involving 2.02 trillion won worth of lubricant supplies.

The FTC's secretariat announced today (June 23) that it has sent an investigation report containing recommendations for sanctions to the involved parties and submitted the report to the commission.

The 10 companies involved are Kwangwoo, Kukdong Oil & Chemicals, DH Chemical, Bumwoo Chem, Bumwoo Chemical, Bumwoo Fine Chem, Bumwoo Hwahak, SHL, Houghton Korea, and Hanyu SKET.

Among these, Kwangwoo, Bumwoo Chem, Bumwoo Chemical, Bumwoo Fine Chem, and Bumwoo Hwahak are affiliated companies, while DH Chemical is a subsidiary of Houghton Korea.

The investigation report is a document containing the facts of the illegal activities identified by FTC investigators and their opinion that sanctions should be imposed; it is equivalent to an indictment in a criminal trial.

Once the investigation report is sent to the parties involved, the FTC's sanction process officially begins.

The FTC suspects that the 10 companies colluded on lubricant supply prices and engaged in bid-rigging for six years and nine months, from January 2018 to October 2024.

The lubricants subject to the collusion include metalworking fluids used to facilitate cutting and grinding during metal processing, as well as industrial lubricants used for the operation of industrial facilities and machinery.

Lubricant prices are heavily influenced by factors such as the price of base oil, which is produced by refining crude oil, and exchange rates.

The 10 companies hold approximately 80% of the market share for metalworking fluids, suggesting that their collusion had a significant impact on the market.

Their market share in the industrial lubricant sector is around 21%.

The total revenue affected by the collusive activities is estimated at approximately 2.02 trillion won.

The FTC explained that most of this originated from price-fixing rather than bid-rigging.

FTC investigators determined that these companies committed very serious violations of the Monopoly Regulation and Fair Trade Act (Fair Trade Act) through price-fixing and bid-rigging.

Following future deliberations, the FTC may impose fines of up to 20% of the revenue affected by the collusion in accordance with relevant laws.

Arithmetically, this means fines could reach up to 404 billion won.

In addition, the FTC has proposed corrective measures, including an order to redetermine prices, the imposition of fines, and the filing of criminal complaints against executives and employees.

Price redetermination is a measure that effectively results in price reductions.

The 10 companies are guaranteed the right to defend themselves by submitting written opinions or requesting to view and copy evidence within eight weeks from the date of receiving the investigation report.

The FTC plans to reach a final decision as quickly as possible once the procedures for guaranteeing the right to defense are completed.

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.