Price-fixing and bid-rigging alleged over nearly seven years

Firms hold 80% of metalworking fluid market, raising cost concerns for manufacturers

Sanctions opinion includes fines, repricing orders and executive referrals

Ten domestic lubricant manufacturers and distributors are set to face a Korea Fair Trade Commission review over allegations of price-fixing and bid-rigging involving roughly 2.02 trillion won ($1.32 billion) in lubricant transactions.

The Fair Trade Commission's secretariat said Tuesday it had completed an examination report outlining the case for sanctions against the companies, submitted it to the commission and delivered copies to the firms involved.

The Korea Fair Trade Commission at the Government Sejong Complex in Sejong. [Yonhap]
The Korea Fair Trade Commission at the Government Sejong Complex in Sejong. [Yonhap]

An examination report sets out the alleged violations identified by Fair Trade Commission investigators and makes the case for sanctions — comparable in function to a criminal indictment.

The ten companies named are Gwangwoo, Kukdong Oil & Chemicals, DH Chemical, Bumwoo Chem, Bumwoo Chemical, Bumwoo Fine Chem, Bumwoo Hwaak, SHL, Korea Houghton and Han-USK ITS. Gwangwoo and four Bumwoo affiliates are related companies, and DH Chemical is a subsidiary of Korea Houghton.

The commission believes the companies jointly coordinated lubricant supply prices and colluded in various bidding processes from January 2018 through October 2024 — a period of roughly six years and nine months.

The products at issue are metalworking fluids used in metal cutting and grinding, and industrial lubricants used to keep industrial facilities and machinery running smoothly. Both types are highly sensitive to fluctuations in base oil prices — derived from crude oil refining — and exchange rate movements.

The companies under investigation hold roughly 80 percent of the metalworking fluid market, raising the possibility that the alleged collusion had a significant impact on market competition. Their combined share of the industrial lubricant market was estimated at about 21 percent.

The commission said it had confirmed indications that the companies jointly set selling prices during a period when raw material costs surged amid the Russia-Ukraine war and the COVID-19 pandemic, and that they also coordinated bids targeting manufacturers and other buyers.

The total sales affected by the alleged collusion were estimated at approximately 2.02 trillion won. The commission said the bulk of that figure stemmed from price-fixing rather than bid-rigging.

Investigators concluded that the companies had committed serious competition-restricting violations of the Fair Trade Act through price-fixing and bid-rigging.

Following its review, the commission may impose fines of up to 20 percent of the sales revenue tied to the violations under applicable law. A straightforward calculation puts the maximum potential fine at 404 billion won.

Alongside this, the commission proposed sanctions including corrective measures — among them a repricing order — fines and referrals of relevant executives and employees for prosecution. A repricing order in effect compels companies to lower their prices.

The companies have eight weeks from the date they received the examination report to submit written responses or request access to and copies of evidence, exercising their right to defense. The commission said it intends to reach a final decision as quickly as possible once all related procedures are complete.


y2k@heraldcorp.com