16 Trillion Won Price-Fixing Scandal: Prosecutors Indict Six Petrochemical Firms and 37 Executives and Employees

Price-Fixing and Bid-Rigging Alleged for 8 Products Over 5 Years
Order of Price Hike Notices Coordinated... Two Executives Detained

Domestic petrochemical companies have been indicted en masse on charges of colluding to fix supply and bidding prices for more than five years. According to the prosecution, the scale of the collusion amounts to 16.3961 trillion won, marking it as the largest price-fixing case ever investigated by prosecutors.

On October 1, the Fair Trade Investigation Division at the Seoul Central District Prosecutors' Office, headed by Chief Prosecutor Ha Heeseok, announced that it has indicted six corporations — LG Chem, PKC, OCI, Aekyung Chemical, Lotte Fine Chemical, and UNID — and 37 of their executives and employees on charges of violating the Monopoly Regulation and Fair Trade Act. Two executives were indicted under detention, while the remaining 35 were indicted without detention.

Na Hee-seok, Chief Prosecutor of the Fair Trade Investigation Division at Seoul Central District Prosecutors' Office, is announcing the investigation results of the petrochemical product price-fixing case on the 1st at the briefing room of Seoul High Prosecutors' Office in Seocho-gu. Photo by Yonhap News Agency

These companies, along with Hanwha Solutions and a total of seven firms, are accused of jointly determining the timing and scale of supply price adjustments and bid prices for eight products — polyvinyl chloride (PVC), plasticizers, caustic soda, hydrochloric acid, hypochlorite, TDI, ECH, and chlorine — from January 2021 to April this year. Hanwha Solutions, having applied for leniency under the immunity program for voluntary disclosure, was exempted from indictment both as a corporation and for its executives and employees.

Kim Yushin, Vice Chairman and CEO of OCI, and Jang Youngsoo, former CEO of PKC, are among the management who have been indicted. Mr. Bae, head of PKC’s sales division, and Mr. Hwang, former head of LG Chem’s PVC and plasticizer business units, were indicted under detention. The prosecution determined that the details of the collusion were shared through internal reporting systems and that high-level executives also participated.

The prosecutors found that these companies convened meetings at the team leader level to agree on the timing and scale of price increases, which they then imposed on their clients. According to prosecutors, they even established the order for sending official documents to conceal the collusion. For large clients’ bidding processes, it was revealed that they predetermined both the successful bidder and the bid prices. The prosecutors believe the companies colluded in bidding to maintain their market share and agreed prices. When responsible staff were replaced, the successors were introduced to competitors, and some firms appointed "liaisons" specifically for organizing meetings.

The collusion targeted key industrial raw materials. PVC is used for pipes, window frames, and electric cable insulation, while caustic soda is needed in semiconductor manufacturing and water treatment. TDI is used for furniture and waterproof coatings, and ECH is a raw material for epoxy resins used in semiconductor packaging. The prosecution pointed out that such collusion increased production costs for manufacturers, ultimately passing the burden on to consumers.

Some companies were found to have continued the collusion even after the sharp rise in international petroleum product prices following the war between the United States and Iran. Collusion was also maintained even as the government discussed support measures for price stabilization. From April to June this year, the Ministry of Trade, Industry and Energy provided approximately 146.5 billion won in raw material cost support to some companies to stabilize production.

Based on its own intelligence, the prosecution conducted a search and seizure operation on seven companies and about 80 related personnel on August 5. On September 14, prosecutors requested arrest warrants for eight senior executives; on the 19th, the court issued warrants for Director Bae and Mr. Hwang, rejecting the others. During the course of the investigation, the prosecution requested formal complaints from the Korea Fair Trade Commission and received two sets of complaints covering seven corporations and 37 individuals. It took 57 days from the start of the compulsory investigation to indictment. The scale of this collusion exceeded both the 10.152 trillion won starch syrup case and the 5.9913 trillion won flour case.

This case concluded with an indictment filed just one day before the abolition of the Prosecutors' Office. From October 2, with the launch of the Public Prosecution Office and the Serious Crime Investigation Agency, prosecutors will lose their direct investigative authority, and investigations into serious economic crimes, including fair trade cases, will be transferred to the Serious Crime Investigation Agency. Thus, this is effectively the last major collusion case directly investigated and prosecuted by the dedicated Fair Trade Division of the prosecution. A prosecution official stated, "Even under the reformed criminal justice system, we will continue to respond sternly to related crimes in close cooperation with relevant institutions such as the Serious Crime Investigation Agency."

This content was produced with the assistance of AI translation services.