Two international automotive elements suppliers that colluded for over seven years in bidding for automotive air vents provided to Hyundai Motor Co. and Kia Corp. have been sanctioned by the Korea Truthful Commerce Fee (KFTC). These corporations exploited their digital 100% monopoly of Hyundai Mobis’ orders to keep away from worth competitors by mutually guaranteeing one another’s current provide privileges.
The KFTC introduced on Dec. 2 that it could impose corrective orders and a complete of 35.417 billion received in fines on Nifco Korea and Korea ITW for colluding on profitable bidders and bid costs in automotive air vent procurement bids issued by Hyundai Mobis and Crea N. The KFTC imposed fines of 21.087 billion received on Korea ITW and 14.33 billion received on Nifco Korea respectively. The KFTC additionally determined to refer each corporations to prosecutors. Nifco Korea is a subsidiary of Japan’s Nifco, whereas Korea ITW is a subsidiary of U.S.-based Illinois Instrument Works.
In keeping with the KFTC, these corporations executed collusion in a complete of 24 bids over roughly 7 years and 6 months from October 2013 to March 2021. Air vents are elements that management airflow in automotive air-con programs and are put in in driver seats, passenger seats, and rear seats.
The KFTC investigation revealed that round 2013, the 2 corporations reached an settlement to respect one another’s foremost car fashions and acknowledge current privileges for successor fashions to forestall profitability deterioration resulting from competitors. Accordingly, when bids for successor fashions of current autos emerged, the prevailing provider would win the contract, and for fully new car fashions, they might individually decide the meant profitable bidder and take turns successful orders.
Actually, among the many 24 bids carried out throughout this era, pre-agreed corporations submitted decrease costs in all bids, together with 19 successor mannequin circumstances and 5 new mannequin circumstances, with profitable bidders chosen as agreed in 20 circumstances.
The background that enabled these corporations to take care of long-term collusion was a monopolistic market construction. From 2013 to 2021, the 2 corporations’ share of Hyundai Mobis’ air vent purchases ranged from a minimal of 96.8% to a most of 100%. With the 2 corporations successfully dividing the market, they might simply share orders with out competitors.
Their collusion ceased in March 2021 after they felt threatened after the KFTC imposed roughly 80 billion received in fines for collusion in different automotive elements, glass runs and climate strips.
A KFTC official said, “This motion represents the detection of long-term collusion carried out secretly within the automotive elements procurement bidding market,” including, “We are going to proceed to strengthen monitoring of collusion within the automotive trade and impose strict sanctions when violations are detected.”
