Decides to Beef up Compliance System
SK Innovation's board of directors has rejected LG Energy Solution’s compensation demand as it “significantly weakens the company’s business competitiveness."
SK Innovation announced on March 11 that its board of directors held an expanded audit committee with board chairman Kim Jong-hoon and all outside directors attending in order to review the final determination of the U.S. International Trade Commission, which came out on Feb. 11.
At the meeting, the board examined SK Innovation’s responses during the legal procedure for the trial at the ITC. It strongly criticized the company’s management for responding poorly to the legal battle due to their lack of experiences in global disputes and U.S. judicial processes. Accordingly, SK Innovation CEO Kim Joon will hire outside global compliance experts in the United States as soon as possible to considerably upgrade the company’s compliance monitoring system.
"It is regrettable that SK Innovation lost the suit due to poor responses to U.S. judicial procedures without having a chance to defend itself against the allegations that SK Innovation misappropriated business secrets of LG Energy Solution, which is the essence of the case,” said Choi Woo-seok, a representative auditor of the SK Innovation board of directors
Board members also began reviewing the terms of compensation to LG Energy Solution. "We will closely study the competitor’s demand at the board level, but it will be impossible for us to accept any demand that can make SK Innovation’s battery business in the United States meaningless or significantly undermine the company’s battery business competitiveness," the Audit Committee was quoted as saying.
This means that SK Innovation will be ready to pull out of the U.S. battery market if LG Energy Solution demands excessive compensation, making it impossible for SK Innovation to finally settle the dispute out of court, industry analysts said. With about a month left before the deadline for U.S. President Joe Biden's review of the ITC’s final ruling, the two companies are still widely apart over the compensation issue.
While LG Energy Solution is reportedly demanding trillions of won in damages, SK Innovation suggests hundreds of billions of won. "If SK Innovation makes a sincere proposal, we will discuss the settlement method very flexibly," LG Energy Solution said, reiterating its previous position.