Two foreign auto parts companies that colluded for over 7 years in tenders for vehicle air vents (vents) to be delivered to Hyundai Motor Company and Kia have been sanctioned by the Fair Trade Commission. It was revealed that they avoided price competition by mutually guaranteeing vested interests in existing deliveries by abusing the fact that they actually monopolize 100% of Hyundai Mobis's order volume.
The FTC announced on the 2nd that it has imposed a total fine of 35.417 billion won on Nif Korea and ITW Korea, two foreign parts companies that colluded with the proposed bidder in a bid to purchase air vents for vehicles. The FTC imposed fines of 21.87 billion won on Korea's ITW and 14.33 billion won on NIFF Korea, respectively. At the same time, the FTC decided to bring charges against both corporations to the prosecutor's office.
According to the FTC, they colluded in a total of 24 bids for about 7 years and 6 months from October 2013 to March 2021. As a result of the investigation, the two companies signed an agreement in 2013 to respect each other's main vehicle models and recognize vested interests in subsequent models in order to prevent deterioration in profitability due to competition. As a result, it was revealed that when a bid for a subsequent model of an existing model came out, the existing supplier won the order, and in the case of a completely new car, the prospective bidder was selected separately and the quantity was won by alternating with each other.
In fact, out of 24 bids held during this period, companies that were agreed upon in advance were lower in all bids, including 19 subsequent models and 5 new models, and the successful bidder was selected as agreed in 20 of them.
The reason they were able to maintain collusion for a long period of time was a monopoly market structure. From 2013 to 2021, the two companies accounted for at least 96.8% of Hyundai Mobis' air vent purchases, reaching a maximum of 100%. In fact, since the two companies split the market, they were able to easily share the volume without competition. Their collusion was stopped in March 2021 when the FTC imposed a fine of 80 billion won for collusion involving Glass Run and Weatherstrip, which are other automobile parts. A FTC official stated, “We will continue to strengthen surveillance on collusion in the automotive industry and severely sanction any violations of the law.”
