The Fair Trade Commission said on the 2nd it will impose a 35.417 billion won penalty surcharge on Nifco Korea and Hankook ITW and file a complaint with prosecutors for colluding on prices in bids for vehicle air vent parts supplied to Hyundai Motor and Kia for more than seven years. Air vents are essential parts that control airflow in a vehicle's climate control system.
Nifco Korea and Hankook ITW agreed in advance on the winning company and bid prices in air vent purchase tenders conducted by Hyundai Mobis and Crea A&E over seven years and six months from 2013 to 2021. The Fair Trade Commission noted, "The two companies effectively split the market within the Hyundai Motor–Kia supply chain and distorted bid competition."
The Fair Trade Commission imposed a 14.33 billion won penalty surcharge on Nifco Korea and a 21.087 billion won penalty surcharge on Hankook ITW. The two companies, which maintained at least a 96.8% share of Hyundai Mobis's air vent purchases as suppliers, sustained their collusion gains by leveraging a structure in which, once they won a new vehicle project, deliveries continued for more than six years.
According to the Fair Trade Commission's investigation, the two companies agreed that, when successor models of existing supplied vehicle lines came up for bidding, the incumbent supplier would continue to win the orders, and for new models, they designated a separate "expected awardee" and coordinated bid prices. In fact, 20 out of 24 awards were made as agreed.
Hyundai Mobis's tenders use a review bidding system that evaluates six items, including price, quality, delivery record, and technological capability. The Fair Trade Commission explained, "In this structure, adjusting the bid price alone can overturn competition scores, making it highly likely that collusion leads to awards."
The two companies halted the conduct in 2021 after the Fair Trade Commission imposed a 82.4 billion won penalty surcharge in another auto parts collusion case in the same industry. However, the Fair Trade Commission noted that this case was a long-term collusion lasting more than seven years and, because it targeted the Hyundai Motor–Kia supply chain, had a significant market-disrupting effect.
The Fair Trade Commission ordered the two companies to prevent recurrence and decided to file a complaint with prosecutors. An official at the Fair Trade Commission said, "Given that collusion persisted for a long time in the Hyundai Motor–Kia parts market, we are taking stern measures," adding, "We will continue to strengthen monitoring of collusion in the auto industry and impose strict sanctions."