Korea Fair Trade Commission has imposed fines and corrective orders on two automotive suppliers for colluding in bids related to vehicle interior components supplied to Hyundai Motor Company and Kia Corporation.
The regulator found that SM Hwajin and Hankook Cubic coordinated their bids in tenders for interior surface treatment services between September 2020 and April 2023. The conduct covered five vehicle models, including the Sportage, EV9, Santa Fe, EV3, and Palisade. Together, the two companies controlled the entire market for this type of work within Hyundai and Kia’s supply chain.
Surface treatment is a key process that enhances the durability, functionality, and appearance of interior components such as dashboards, door trims, and steering wheels. Because both companies held a combined market share of 100% in this niche, competition between them was critical for ensuring fair pricing.
According to the authority, the collusion began after SM Hwajin recovered from financial difficulties and sought to regain business. Concerned about renewed price competition, Hankook Cubic agreed to coordinate rather than compete. The companies then decided in advance who would win each tender and aligned their bid prices accordingly.
Under the arrangement, SM Hwajin secured contracts for four models, while Hankook Cubic took the remaining project. The outcome closely matched their prior agreement, effectively eliminating genuine competition in the bidding process.
The KFTC concluded that this behavior constituted illegal bid rigging and imposed total fines of approximately 2.6 billion won, almost $2 million USD. It also ordered both companies to cease similar conduct in the future.
