SK Innovation Board "Lack of Global Dispute Experience Led to ITC Defeat" Strong Rebuke

SK Innovation Board "Unacceptable to Accept Excessive Compensation" Position Clarified
One Month Left Until US Administration Veto Period
Compliance System Also Reorganized

[Asia Economy Reporters Hyewon Kim and Yoonju Hwang] The SK Innovation board of directors, the final decision-making body on major management issues, has taken steps to closely monitor the battery trade secret infringement lawsuit against LG Energy Solution at the U.S. International Trade Commission (ITC). This move signifies that the company is at a critical juncture for a major business decision. With the deadline for U.S. President Joe Biden’s veto power over the ITC’s final decision approaching in one month, the board has accelerated its review of the negotiation terms between SK Innovation and LG Energy Solution.

According to industry sources on the 11th, at an expanded audit committee meeting held the previous afternoon attended by all outside directors of SK Innovation, there was strong criticism regarding the inadequate response to the U.S. judicial process and calls to establish a global-level compliance monitoring system. The board also expressed that paying an unreasonable compensation amount to LG Energy Solution could constitute a breach of fiduciary duty and is therefore unacceptable.

At the meeting, the board decided to use this incident as a lesson to internally reorganize the global litigation response system and simultaneously appoint external global experts to establish a dual or triple-layered perfect compliance monitoring system. The board strongly criticized the insufficient handling of the U.S. judicial process due to a lack of global dispute experience. In response, SK Innovation plans to appoint external experts in global compliance in the U.S. as soon as possible to enhance its compliance monitoring system.

Choi Woo-seok, Chairperson of the SK Innovation board’s audit committee, stated, "It is very regrettable that we lost the case due to inadequate response to the U.S. judicial process without even having the opportunity to defend the core issue of trade secret infringement." He added, "At a time when SK Innovation must further expand its global business, strengthening the compliance system beyond global standards is an urgent and critical task."

With the deadline for the U.S. president’s veto power over the ITC’s final decision just one month away, the SK Innovation board has begun careful deliberation over the compensation demands and other conditions from both companies. The board also received a report on the recent negotiation terms newly proposed by SK Innovation and LG Energy Solution’s responses. Subsequently, the audit committee stated, "While the board will closely examine the competitor’s demands, it is practically impossible to accept any conditions that would render SK Innovation’s battery business in the U.S. meaningless or significantly weaken its business competitiveness."

This suggests that if LG Energy Solution’s proposed compensation does not meet the SK Innovation board’s acceptable threshold or is deemed to hinder the battery business in the U.S., the company may even consider withdrawing from the U.S. market as a worst-case scenario. In fact, LG Energy Solution and SK Innovation have been attempting to reach a settlement following the ITC’s final decision but have yet to narrow their differences. LG Energy Solution is reportedly demanding compensation in the range of 3 trillion KRW, while SK Innovation claims the amount should be less than 1 trillion KRW.

The SK Innovation board has also begun a thorough assessment of its battery business capabilities. To conduct further review of key issues, board members plan to visit the Daedeok Battery Research Institute and other sites soon, and prepare a position statement and fundamental improvement measures related to the U.S. ITC lawsuit response.

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