Fair Trade Commission, Prosecution of Two Foreign Auto Parts Companies
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Export cars parked at Pyeongtaek Port, Gyeonggi Province. /Yonhap News,
, ‘The Fair Trade Commission announced on the 2nd that it would impose fines of 35.417 billion won and file a prosecution against Nippon Piston Ring Korea Co., Ltd. (Nifco Korea) and ITW Korea for colluding on prices in the automotive air vent parts bidding process for Hyundai Motor Company and Kia Corporation over a period exceeding seven years. Air vents are essential parts controlling air flow in a vehicle’s interior climate control system.’,
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, ‘Nifco Korea and ITW Korea agreed beforehand on the winning bidder and bid prices in the air vent procurement bids conducted by Hyundai Mobis and Kre.Auto Engineering from 2013 to 2021, lasting 7 years and 6 months. The Fair Trade Commission pointed out, “The two companies effectively divided the market within the Hyundai and Kia supply chains, distorting bid competition.”’,
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, ‘The Commission imposed a fine of 14.33 billion won on Nifco Korea and 21.087 billion won on ITW Korea. The two companies maintained at least a 96.8% share in Hyundai Mobis’s air vent procurement, using a structure where new project procurement led to more than six years of continued supply, to sustain cartel profits.’,
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Shape of air vent parts. /Provided by Fair Trade Commission,
, ‘The Fair Trade Commission’s investigation revealed that the two companies agreed that the existing supplier would continue to win bids for follow-up models of cars they previously supplied parts for, and, for new models, they designated a “planned awardee” and set bid prices accordingly. Actual contract awards aligned with these agreements in 20 out of 24 cases.’,
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, ‘Hyundai Mobis’s bids evaluate six criteria, including price, quality, delivery performance, and technology, through a review auction system. The Commission explained, “In this structure, adjusting bid prices alone can overturn competition scores, making it probable that collusion results in winning the award.”’,
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, ‘In 2021, the two companies ceased similar actions after the Fair Trade Commission imposed fines of 82.4 billion won on a separate cartel case involving other automotive parts in the same industry. However, the Commission noted that this was a long-term cartel lasting over seven years, significantly disrupting the market targeting Hyundai and Kia’s supply chains.’,
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, ‘The Fair Trade Commission plans to issue a reoccurrence prevention order to the two companies and refer them for prosecution. A representative from the Commission stated, “Due to the prolonged duration of the cartel in the Hyundai and Kia parts market, strict measures are necessary,” and “We will continue to strengthen monitoring and impose strict sanctions on cartels within the automotive industry.”’,
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