Ten lubricant manufacturing and sales companies are set to face the Korea Fair Trade Commission (KFTC) over allegations of colluding on supply prices and bidding for contracts worth 2.02 trillion won.
The KFTC secretariat announced on June 23 that it has sent a review report containing its recommendations for sanctions to the involved parties and submitted it 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 affiliates, while DH Chemical is a subsidiary of Houghton Korea.
The review report, which details the facts of the alleged illegal activities and the KFTC examiner's opinion on the need for sanctions, is equivalent to an indictment in a criminal trial.
The delivery of the review report to the parties marks the formal commencement of the KFTC's sanction process.
The KFTC suspects that the 10 companies colluded on lubricant supply prices and engaged in bid-rigging for a period of 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 processes for metal materials, as well as industrial lubricants used for the smooth operation of industrial facilities, machinery, and equipment.
Lubricant prices are heavily influenced by factors such as exchange rates and the price of base oil, which is produced by refining crude oil.
Given that these 10 companies hold approximately 80% of the market share for metalworking fluids, their collusion is believed to have had a significant impact on the market.
Their market share in the industrial lubricant sector is around 21%.
The total revenue affected by the collusion is estimated at approximately 2.02 trillion won.
The KFTC explained that the majority of this amount stemmed from price-fixing rather than bid-rigging.
KFTC examiners determined that these companies committed very serious violations of the Monopoly Regulation and Fair Trade Act through price-fixing and bid-rigging.
Following future deliberations, the KFTC may impose fines of up to 20% of the revenue affected by the collusion, in accordance with relevant laws.
Mathematically, this could result in fines of up to 404 billion won.
In addition, the KFTC has proposed corrective measures, including orders to redetermine prices, the imposition of fines, and the filing of criminal complaints against executives and employees.
A price redetermination order effectively serves as a measure to lower prices.
The 10 companies are guaranteed the right to defend themselves, including submitting written opinions and requesting to view or copy evidence, within eight weeks of receiving the review report.
The KFTC plans to reach a final decision as quickly as possible once the procedures for ensuring the right to defense are concluded.
(Photo: Provided by KFTC, Yonhap News)