Prosecutors Summon OCI CEO, LG Chem Executive Over Alleged Petrochemical Product Price-Fixing

[Financial News] Prosecutors have summoned executives from major domestic petrochemical companies over allegations that they colluded to fix product prices by taking advantage of supply uncertainty caused by the war in the Middle East.
According to legal sources on the 10th, the Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office, headed by Chief Prosecutor Na Hee-seok, questioned Jang Young-soo, former CEO of PKC; Kim Yoo-shin, vice chairman and CEO of OCI; and an executive identified only as Executive A, head of LG Chem's PVC and plasticizer business unit. They are suspected of violating the Fair Trade Act.
They are suspected of having coordinated in advance, over several years, the timing and scale of price increases for eight petrochemical products, including polyvinyl chloride (PVC) plasticizers, caustic soda, and hydrochloric acid. Prosecutors particularly suspect that they engaged in the alleged collusion by taking advantage of unstable naphtha supplies caused by the war in the Middle East.
On the 5th of last month, prosecutors searched the offices of seven petrochemical companies—Hanwha Solutions, LG Chem, Aekyung Chemical, OCI, LOTTE Fine Chemical, PKC, and Unid—as well as locations linked to people involved in the case. About a month later, they began summoning key suspects, signaling that the investigation is accelerating.
PVC is a synthetic plastic made by combining raw materials extracted from petroleum and salt. It is used in construction materials, pipes, and wire insulation. Plasticizers are additives that make PVC and similar materials softer.
The case is reportedly the largest collusion investigation conducted by prosecutors. Previously, the largest was considered to be the 14 trillion-won oil-refiner price-fixing case in which indictments were filed in July.
The Fair Trade Commission also detected signs of price-fixing involving PVC and plasticizers in May and conducted on-site inspections of four petrochemical companies. As prosecutors have proceeded from searches to summoning key suspects, some observers have raised the possibility that the results of the prosecution investigation could be released before those of the Fair Trade Commission's inquiry.
The Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office previously indicted the four major oil-refining companies and four executives and employees on charges of colluding over the timing and scale of oil-product price increases immediately after the U.S.-Iran war, or forcing gas stations to purchase products from specific refiners. Trials are also under way for companies and individuals implicated in collusion cases involving flour, sugar, and Korea Electric Power Corporation (KEPCO) bidding.
 
[email protected] Choi Eun-sol Reporter