7 Steel Companies Colluding on Scrap Metal Prices Caught... Fined 300 Billion Won

Fair Trade Commission imposes 300.083 billion KRW fine on Hyundai Steel, Dongkuk Steel, Daehan Steel, etc.
Revealed agreement on fluctuation range and timing of steel scrap base prices over 8 years

[Sejong=Asia Economy Reporter Kwon Haeyoung] It has been revealed that seven steelmakers, including Hyundai Steel, Dongkuk Steel, and Daehan Steel, colluded on scrap metal (scrap iron) prices for eight years.

The Fair Trade Commission announced on the 26th that it has uncovered price-fixing of scrap metal purchase reference prices by seven steelmakers?Hyundai Steel, Dongkuk Steel, Daehan Steel, YK Steel, Korea Steel, Hankook Steel, and Korea Special Steel?and imposed corrective orders along with a total fine of 300.083 billion KRW.

These seven steelmakers agreed on and executed the fluctuation range and timing of scrap metal purchase reference prices, which are raw materials for steel products such as rebar, from 2010 to 2018. Scrap metal is supplied to steelmakers through a structure involving collectors (small-scale collectors) who gather scrap iron → middlemen who accumulate the collected scrap → suppliers (account holders). Steelmakers pay the purchase price, which is the internally set scrap metal purchase reference price plus incentives and transportation costs, to purchase scrap metal, and each company maintained long-term collusion by agreeing on the fluctuation range and timing of the reference price.

The specific collusion method was carried out through information exchanges between purchasing team leaders at each company by factory location, such as Yeongnam and Gyeongin regions, and purchasing team staff. It was revealed that they exchanged important information for determining the reference price, including plans for changes in purchase reference prices, inventory and incoming quantities, and import plans, a total of 155 times. They also paid special attention to maintaining confidentiality to prevent the collusion from being exposed externally. When reserving meetings, they used aliases and kept the meetings confidential even from company superiors. During purchasing team leader meetings, the use of corporate cards was strictly prohibited; instead, cash was pooled to pay for meals, and document creation regarding meeting outcomes was also banned.

The Fair Trade Commission plans to file charges after further review of the defendants' eligibility and related matters.

A Fair Trade Commission official said, "This action is significant in that it detected and sanctioned collusion that was secretly conducted over a long period among steelmakers," and added, "It is expected that competition will be revitalized by breaking the practice of steelmakers artificially adjusting prices through collusion in the scrap metal purchasing market." The official continued, "Going forward, the Fair Trade Commission will strengthen inspections of collusion in raw and subsidiary materials that degrade industrial competitiveness, in addition to sectors closely related to citizens' daily lives such as food and consumer goods, and will strictly enforce a zero-tolerance policy when collusion is detected."

This content was produced with the assistance of AI translation services.