KFTC launches probe into $14.5 billion lubricant price-fixing cartel

South Korea's Fair Trade Commission (KFTC) has launched a probe into an alleged price-fixing cartel involving 10 lubricant manufacturers and sellers, with potential penalties including fines and criminal charges. The KFTC's investigation division has sent a report outlining its findings and proposed sanctions to the companies, initiating the formal review process.

The companies under scrutiny are Guangwu, Keukdong Oil, DH Chemical, Beomwoo Chem, Beomwoo Chemical, Beomwoo Hwainchem, Beomwoo Chemical, SHL, Hankook Houton, and SK ETS. The KFTC alleges that these firms colluded on prices for metalworking fluids and industrial lubricants between January 2018 and October 2024. This alleged collusion occurred during periods when raw material costs were rising due to factors like the Russia-Ukraine war and the COVID-19 pandemic.

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Most manufacturing companies nationwide that use machinery have been harmed.

The products involved are essential for manufacturing processes; metalworking fluids are used in cutting and grinding metals, while industrial lubricants ensure the smooth operation of machinery and equipment. The companies hold a significant market share, accounting for 80% of the metalworking fluid market and 21% of the industrial lubricant market. The total sales affected by this alleged cartel are estimated to be around 20.2 trillion won (approximately $14.5 billion USD).

The KFTC's investigation division views these actions as serious violations. They are recommending a price readjustment order, which would compel companies to set fair prices, alongside administrative fines and criminal referrals for executives. The commission believes a price readjustment order is necessary because prices set during the cartel period have not decreased despite the alleged collusion ending. The final decision on sanctions and their severity will be made after the companies submit their opinions and a full commission meeting is held.

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The cartel activities have ended, but the prices determined during the cartel period have not yet decreased, necessitating a price readjustment order.