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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] South Korea’s antitrust regulator has imposed a total of KRW 2.591 billion in fines on two suppliers for colluding in bids related to automotive interior surface treatment contracts for Hyundai Motor and Kia.
The Korea Fair Trade Commission (KFTC) said it levied fines of KRW 1.632 billion on SM Hwajin and KRW 959 million on Hankook Cubic for engaging in bid-rigging practices.
The two companies had formed a duopoly in the hydrographic printing segment, a surface treatment process used to apply various textures to interior components such as dashboards and steering wheels. According to the KFTC, their combined market share in the relevant bidding market reached 100%.
The regulator found that between September 2020 and April 2023, the companies pre-arranged winning bidders in five tenders issued by Hyundai Motor and Kia for selecting suppliers of interior surface treatment services.
The collusion was rooted in shifting competitive dynamics. In 2017, SM Hwajin faced financial difficulties, allowing Hankook Cubic to secure most of the orders. As SM Hwajin recovered in 2020 and sought to regain market share, Hankook Cubic—facing limited additional capacity—became concerned that aggressive low bids could erode profitability.
The companies ultimately agreed to coordinate their bids. SM Hwajin proposed the arrangement to secure a greater share of contracts, while Hankook Cubic agreed to avoid price competition.
They divided contract volumes across five vehicle models—Sportage, EV9, Santa Fe, EV3, and Palisade—with SM Hwajin taking four models and Hankook Cubic assigned the Palisade. The companies also coordinated bid prices, according to the KFTC.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
