Prosecutors have successively summoned senior executives of major companies, including PKC(001340), a former CEO, and LG Chem(051910), an executive, on suspicion of colluding to fix petrochemical product prices by taking advantage of disruptions in raw material supplies caused by the Middle East war. Following last month's raids of seven petrochemical companies, including LG Chem and Hanwha Solutions(009830), the investigation appears to be expanding to top management. The size of the collusion is said to be the largest among cases prosecutors have investigated to date.
According to legal sources on the 10th, the Seoul Central District Prosecutors' Office Fair Trade Investigation Department (Director General Na Hee-seok) summoned and is questioning Jang Young-su, former PKC CEO, and an LG Chem PVC and plasticizer division head, Executive Director A, on suspicion of violating the Fair Trade Act. The CEO of OCI(456040) was also summoned and is reportedly being questioned the same day. The questioning of the Hanwha Solutions CEO has already been completed.
Early last month, prosecutors conducted raids on seven corporations, including LG Chem, Hanwha Solutions, Aekyung Chemical(161000), OCI, 롯데정밀화확, PKC, and UNID(014830), as well as on about 80 related individuals. These companies are suspected of colluding for years to fix prices for eight petrochemical product categories—PVC, caustic soda, plasticizers, hydrochloric acid, chlorine, hypochlorite, TDI, and ECH—after the Middle East war destabilized naphtha supplies.
PVC is a synthetic plastic made from naphtha and other feedstocks and is widely used in building materials, pipes, and wire coatings. Plasticizers are chemical additives that make PVC soft and flexible. When petrochemical product prices rise, they can affect costs in sectors such as construction and manufacturing.
This investigation is seen as part of a broader crackdown on price-distorting practices involving petroleum-based processed goods, aligning with the government's recent emphasis on a tough response to price disruptions. In particular, this case is said to be the largest collusion case prosecutors have investigated in the past 78 years. Previously, the $14 trillion won-scale refinery collusion case indicted in July was the largest on record.
The Korea Fair Trade Commission (FTC) also conducted on-site inspections of petrochemical companies in May, but it reportedly notified the opening of investigations for only three items: PVC, plasticizers, and caustic soda. As prosecutors have already begun summoning key suspects, their findings are expected to come out before the FTC's.
The Seoul Central District Prosecutors' Office Fair Trade Investigation Department has achieved successive results this year by probing large collusion cases in key consumer-related industries such as food and refining. In February, it referred 52 executives and employees from companies involved in about 10 trillion won of collusion in flour, sugar, and electricity to trial. At the time, President Lee Jae-myung offered direct encouragement on social media (SNS), saying, "Prosecutors achieved a major result."
In April, it indicted CJ CheilJedang(097950), 대상, and 사조CPK on charges of colluding to fix prices for starch sugar worth in the 10 trillion won range, and in July it sent four refiners—SK에너지, GS Caltex, HD Hyundai Oilbank, and 에쓰오일—to trial on charges of colluding on oil prices. It also handled other fair trade cases, including improper support by the Sampo Group owner family and abuse of superior bargaining position by lodging platforms Yanolja and Yeogi Eottae.