By Yoon Ja-young
Hanwha and Koryo Nobel Explosives, the country’s only explosive companies, were fined 64.4 billion won by the antitrust watchdog for collusion.
They will also be referred to the prosecution.
The Fair Trade Commission (FTC) said Thursday it levied a 51.7 billion won fine on Hanwha and 12.7 billion won fine on Koryo Nobel Explosives, for rigging prices and colluding to share the market between them, hampering new players from entering into the market.
The two companies manufacture industrial explosives, which are used for the construction of tunnels and mining. The domestic market had been monopolized by Hanwha which was set in 1952, and since the entry of Koryo in 1993 there have only been two players. The explosives market reached a peak in 2010 with 80,000 tons, but the market decreased to 76,000 tons in 2013.
The FTC explained that the two companies colluded on price and market share to avoid price competition and maximize their profits, as well as hampering the entry of new players.
Since the first collusion in 1999 when the two companies raised prices by around 15 percent, they colluded in raising prices three more times until 2008. Each time, they raised the price by around 8 percent. They were discussing raising prices again in 2012, but left them as is when the FTC started its investigation.
They also allegedly agreed about how much of the market each would take. They set the ratio at 72 percent for Hanwha and 28 percent for Koryo.
A new player, Sehong Explosives, tried to enter the market in 2002, but the two companies colluded to take action such as supplying explosives at lower prices than Sehong and punishing explosive sales agencies that wanted to do business with the new company. Sehong Explosives got out of the market in 2007.
The FTC explained that Hanwha and Koryo violated the law which prohibits price-fixing.
“They took extreme care not to be caught by the FTC. The managers turned off their cell phones when they met for collusion, and used other people’s phones or public phones instead,” a FTC official explained.
Hanwha said it deeply regrets its actions. “We sincerely apologize for the incidents. Hanwha will abide by the law and fair competition, making our best efforts to avoid recurrence of such incidents,” a Hanwha spokesman said.