LG demands 'proportionate' compensation from SK over battery row case

By Yi Whan-woo

LG Chem Vice Chairman and CEO Shin Hak-cheol slammed SK Innovation (SKI), Thursday, vowing to receive “proportionate” compensation for the damage it suffered from the alleged theft of trade secrets related to electric vehicle (EV) battery technology.

During an annual shareholders meeting at the firm's headquarters in Seoul, Shin referred to SKI as “the rival” and said it is refusing to accept the verdict of the U.S. International Trade Commission (ITC) which ruled in favor of LG Chem. LG Chem is the parent firm of LG Energy Solution (LGES).

LG Chem filed trade complaints against SKI in the U.S. in 2019 over allegations of stealing trade secrets. The company, which supplies EV batteries to Tesla and General Motors, spun off its battery unit late last year to form LGES, which has been seeing the trade fight through.

The ITC slapped SKI with a 10-year import ban on EV batteries, while allowing the firm to continue importing components for batteries and other related parts a while longer for its embattled business partners, Ford Motor and Volkswagen of America, giving them time to find new suppliers.

Facing trillions of won in compensation payments, SKI claimed the ruling is “regrettable” and said it will make the truth known later by thoroughly analyzing the ITC ruling.

“We will deal with the case in a stern manner to receive a reasonable and proportionate amount for compensation,” the LG Chem CEO said. “We accordingly will make utmost efforts to protect our intellectual property accumulated over decades, for shareholders, investors and the company itself.”

He also stressed that respect for intellectual property, including the sales secrets of a rival company, is “a basic business rule to observe” as environmental, social, and corporate governance (ESG) values emerge as international business norms.

“And it is regretful that the rival not only does not accept the ruling of the ITC, which is internationally respected on global trade standards, but also merely attributes its defeat to its lack of experience in international business disputes,” Shin said. “We can't let go of the case for the sake of global companies that are developing technologies on the belief of fair competition and clients who make purchases on the belief they were made lawfully.”

LGES demanded nearly 3 trillion won ($2.6 billion) in total compensation from SKI, while the methods of the payment could vary including an equity swap of SKI's parts affiliate and royalties, sources involved with the issue said. SKI continues to insist on a compensatory payment in the 1 trillion won range. The ITC ruling could jeopardize SK Innovation's $2.6 billion battery factory currently under construction in Georgia.

Meanwhile, Shin assessed the company was preemptive and agile in management and “greatly enhanced its value” despite the COVID-19 crisis.

LG Chem posted nearly 30 trillion won in sales and 1.79 trillion won in operating profit in 2020.

He addressed three goals for this year ― acceleration in nurturing the company's next growth engines, creation of the world's top-level environmental safety system and consolidation of the firm's reputation as a leader in sustainability.

In relation to the first goal, LG Chem seeks to work intensively on EV battery components, post-consumer recycled (PCR) plastic, biodegradable plastic products and e-mobility services characterized by battery electric vehicles, fuel cell electric vehicles, hybrid vehicles and their infrastructures.

Shin underscored that the creation of an advanced environmental safety system should be preceded by a change in mindset of all employees including executives.

On sustainability, Shin reminded the shareholders of the company's goal of achieving “Carbon Neutral Growth.”