Six South Korean petrochemical companies and 37 current and former executives and employees have been indicted on charges of fixing prices on products worth 16.4 trillion won ($11 billion), the largest price-fixing case ever investigated by Korean prosecutors.
The Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office, headed by Na Hee-seok, said on the 1st that it had indicted a total of 43 defendants — six petrochemical companies and 37 executives and employees, including current and former chief executives — for violating the Fair Trade Act.
The companies are LG Chem, Aekyung Chemical, LOTTE Fine Chemical, OCI, PKC and UNID. Hanwha Solutions was initially part of the investigation but was excluded from the indictment in light of its cooperation with investigators.
The companies are accused of colluding from January 2021 through April this year on the size and timing of price changes for eight petrochemical products. The value of the affected transactions reached 16.3961 trillion won. The products included polyvinyl chloride (PVC), plasticizers, caustic soda and hydrochloric acid — basic raw materials used across a wide range of industries.
According to prosecutors, the collusion was carried out mainly through meetings of team leaders from each company. To conceal the arrangement, the companies even set the order in which they would send out notices of price increases, and coordinated winning bidders and bid prices so that they could apply the agreed prices while preserving their market shares. Investigators also found messages exchanged among executives at the companies, including one that read, "We're going all the way with this, from start to finish."
The collusion continued even as the government injected about 146.5 billion won in support funds after international petroleum product prices surged in the wake of the U.S.-Iran war.
Prosecutors stressed that statutory penalties under the Fair Trade Act must be raised to stamp out corporate collusion. Under the current law, individuals convicted of price-fixing face no more than three years in prison or a fine of up to 200 million won, and the maximum fine for a company is also capped at 200 million won. By comparison, the United States provides for up to 10 years in prison and fines of up to $1 million, while Britain and Canada set no ceiling on fines. "Korea has the lightest penalties for price-fixing among major countries," Na said. "We will take an active part in discussions on overhauling the legal framework, including raising statutory penalties and introducing provisions that treat gains from collusion as criminal proceeds."
