FTC fines companies for rigging of TDAE bids

Two companies were fined a total of 5.1 billion won ($4.3 million) for bid rigging.

The Fair Trade Commission (FTC) said Monday that Michang Oil and Brico International fixed prices 13 times from November 2011 to March 2015 in the supply of treated distillate aromatic extract (TDAE) products to Kumho Petrochemical.

TDAE is a petrochemical that is used in the manufacture of synthetic rubber, which is used to make products such as tires and golf balls.

According to the regulator, the two companies likely secured sales of 107.8 billion won during the period of collusive behavior. The FTC levied a fine of 3.45 billion won on Michang and 1.66 billion won on Brico, and ordered preventative measures be taken by both companies.

The antitrust body said the two companies colluded to submit favorable prices in their bids to supply Kumho by communicating with each other every quarter during the period.

During the five-year period, Michang won the bid six times, while Brico received the order five times. A Brico subsidiary won the bids for the other two remaining instances during the period in question.

TDAE products are produced by refining companies, in countries such as Germany and Russia, making the local TDAE market completely reliant on overseas products.

The regulator explained that intermediary companies such as Michang and Brico that import the product play an important role as local synthetic rubber manufactures rely on supplies handled by such companies.

The FTC said in a statement that it would strengthen the monitoring of possible bid-rigging in the intermediary market.

The domestic TDAE market was worth 64 billion won last year. The market size is estimated to have been worth 54 billion won annually from 2012 to 2015, the period of collusion.

BY CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr]