An alarming trend of heavyweight Korean firms paying hefty fines for international price-fixing cartel allegations has come to light. In the past 4 years, Samsung Electronics, LG Display and Korean Air have all plead guilty to cartel charges abroad.
Korean corporations alone have paid a total of 1.7 trillion won, or 1.5 billion dollars, in US criminal fines. Of the 8 highest criminal fines that the antitrust division of the US Justice Department has ever imposed, 4 have been to Korean firms.
Pleading guilty to international cartel allegations poses a problem since it opens the floodgates for other countries to charge companies with additional fines. In November of 2008, LG Display was charged with a $400 million fine for price fixing in liquid crystal display panels (LCDs) with two other leading Asian flat-screen producers. This has led to a March 2009 EU investigation into international cartel activities in the LCD sector, putting LG Display at risk of a heavy fine yet again.
In addition to criminal fines, private class action suits and detainment of corporate executives have sharply risen, according to the Korean Fair Trade Commission. And the issue threatens to spread further. Not only are the US and EU cracking down on cartel formation, but developing countries such as BRICs have begun monitoring antitrust activities.
Because a single admission of guilt can snowball into astronomical amounts in penalties paid to various countries – not to mention the danger of additional legal complications such as class action suits – experts agree on the need for accurate assessment of local antitrust laws.
Thus, the Fair Trade Commission of Korea is educating at-risk industries in international cartel prevention. Corporate executives of export-heavy industries such as technology, shipbuilding, textiles, chemicals, steel and mechanical engineering attended educational sessions in March and April, where experts discussed international regulatory trends, precedents and preventive methods.
Overseas Korean firms aren’t neglected. 100 employees of 40 Korean firms operating in Europe attended the first of international cartel prevention sessions geared toward EU-based businesses in April, held in Frankfurt, Germany. The Fair Trade Commission plans to hold further sessions in international business hubs, such as Beijing, China in July and Los Angeles, US in October.
As South Korea’s export economy becomes the 7th largest in the world, competing nations are keeping an eye on South Korean firms, say experts. More than ever, localized legal screening of business practices are being called for.