Hyundai and Kia Bid Collusion: SM Hwajin and Korea Cubic Fined KRW 2.6 Billion for Price-Fixing

Two Companies with 100% Share of Interior Surface Finishing
Divided Bid Volumes for Five Car Models Over Three Years

Two companies that colluded to prearrange successful bidders and agree on prices in bids for new car interior surface treatment work for Hyundai Motor and Kia will face strict sanctions from the Korea Fair Trade Commission (KFTC). It was revealed that these companies maintained an organized cartel for about three years, using their dominant positions to split the market for this manufacturing process.

The KFTC announced on April 22 that it has decided to impose corrective orders and a total fine of 2,591,000,000 won on SM Hwajin and Korea Cubic for colluding in car interior surface treatment bids conducted between September 2020 and April 2023. The fines are 1,632,000,000 won for SM Hwajin and 959,000,000 won for Korea Cubic.

This collusion began in June 2020, after SM Hwajin succeeded in normalizing its management and urgently needed to secure stable bid volumes. At that time, SM Hwajin proposed to Korea Cubic, which held a monopoly on Hyundai Motor and Kia bid volumes, "Help us avoid low-price bidding competition and secure supply volume." Korea Cubic accepted this proposal to prevent profit deterioration caused by low-priced bids from competitors, forming the foundation of the cartel.

According to their agreement, the two companies systematically divided the bid volumes for five new car models. SM Hwajin was pre-assigned four models—Sportage (NQ5), EV9 (MV), Santa Fe (MX5), and EV3 (SV)—while Korea Cubic was assigned one model, Palisade (LX2).

Once the successful bidder was predetermined, the other company would participate as a dummy bidder, submitting a price higher than the winning bid to carry out the agreement. In fact, for all five bids, the prearranged company won the contract each time without a single error.

Hyundai Motor and Kia have sourced 100% of their surface-treated interior parts—using the water transfer printing method—exclusively from these two companies. The KFTC explained that this measure is significant because it addresses and penalizes covert collusion in the intermediate goods market with an oligopolistic structure, which undermines industrial competitiveness.

A KFTC official stated, "We will continue to closely monitor collusion in the parts sector that weakens the competitiveness of downstream industries and take strict action whenever violations of the law are detected."

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