FTC fines car parts makers 37.2 billion won for collusion

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FTC fines car parts makers 37.2 billion won for collusion

The Fair Trade Commission on Monday ordered the Korean affiliates of three international auto parts suppliers to pay 37.2 billion won ($33.4 million) for colluding on contract bids.

The three companies include the local affiliate of Japan’s Denso, which was fined 16.9 billion won; Hyundam Industrial of Japan’s Aisan Industry, which was fined 16.8 billion won; and Delphi Powertrain, a venture of the American auto parts developer Delphi, which was fined 3.4 billion won.

According to the antitrust regulator, the three companies colluded on a bid to supply fuel pumps to Hyundai Motor Group between August 2007 and July 2009. The suppliers, which collectively took up more than half the market share in fuel pumps, allegedly exchanged information on their bids to make sure they remained above a certain level to prevent the price from dropping too low.

The Fair Trade Commission said it viewed the collusion as a public safety issue because fuel pumps play a major role in vehicles, injecting fuel to the car engine when it is turned on.

The regulator added that between June 2009 and May 2012, Denso Korea and Delphi Powertrain cooperated to prevent other suppliers from winning contracts on variable valve timing parts, a crucial technology that improves vehicle fuel efficiency.

In 2009, Korean automakers had been pressuring the suppliers to lower the cost of variable valve timing parts. The market then was dominated by Denso Korea and Delphi Powertrain.

“We have strictly regulated international collusion in major car parts that have a huge influence in the auto market,” said Bae Young-soo, head of the Fair Trade Commission’s cartel investigation department. “We expect [the fine] will secure the auto industry’s competitiveness and that the benefits will be passed on to consumers.”

The commission has been toughening its investigations of collusion, particularly in cases involving foreign companies, after Kim Sang-jo, a former economics professor and activist, took the helm of the agency in June.

During a National Assembly hearing for a routine legislative audit, Kim said the Fair Trade Commission is looking into possible collusion on auto parts by major German companies including Volkswagen, Audi and BMW.

“We have not contacted the foreign automobile companies, but we are closely sharing information with overseas antitrust agencies,” Kim said. “We are working so that we can make a fast judgment.”

After Der Spiegel published a story in July on major German automakers colluding on car parts, antitrust agencies, including the European commission on economic competition, have started investigations into the case.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]
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