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Supreme Court Revokes KFTC Sanctions – Including KRW 31.3 Billion Fine – Imposed on Steelmaker for Alleged Involvement in Steel Scrap Metal Buyers’ Cartel


Kim & Chang represented a steel manufacturing company (hereby referred to as the “Complainant”) in an administrative action seeking the annulment of an administrative fine and a corrective order imposed by the Korea Fair Trade Commission (the “KFTC”) for the Complainant’s alleged involvement in a steel scrap metal buyers’ cartel with other steel companies. The Supreme Court of Korea issued a ruling on May 18, 2023, which denied the appeal made by the KFTC on the Seoul High Court decision that revoked all of the sanctions the KFTC had imposed on the Complainant, including an administrative fine of KRW 31.3 billion.

The aforementioned KRW 31.3 billion fine is the largest KFTC administrative fine revoked by Korean courts in the last three years, and accounts for 22% of the total amount of fines revoked between 2020 and 2022 (KRW 138.8 billion) and 67% of the average amount revoked each year during that time (KRW 46.2 billion).

The key issue in this case was whether there had been an explicit or implicit meeting of the minds between the Complainant and the other steel companies on the scope and timing of the change in the base purchase price of steel scraps. In response to the KFTC’s argument that the Complainant had been involved in price-fixing based on information exchange, Kim & Chang successfully argued that: (i) the Complainant, compared to the other steelmakers, had less incentive to participate in the cartel as it had a unique purchasing structure – obtaining most of its scrap metal from a single supplier, with which it maintained a long-standing relationship – and therefore was less affected by changes in the base price of scrap metal, (ii) the Complainant’s CEO, and not the members of its procurement team as was argued by the KFTC, had the sole authority to decide the base price of its scrap metal purchases, (iii) while certain working-level members of the Complainant’s procurement team attended meetings or communicated with the heads of the procurement teams of the other steel producers, the purpose of such contact was merely to collect information and not to from an agreement on how much and when they would each change their base price for steel scraps, and (iv) while there appears to be an alignment between the Complainant’s and the other steel companies’ changes in their base purchase prices for scrap metal, the Complainant independently changed its price in response to the changes in the prices of the other steel companies and did not engage in collusion.
Based on our extensive experience in successfully handling numerous cartel cases, our firm provided the courts with various materials and evidence, including a witness testimony demonstrating that the Complainant had not been involved in the alleged price-fixing and had no reason to do so, ultimately succeeding in persuading the Supreme Court to affirm the Seoul High Court’s decision to revoke the entire administrative fine and corrective order imposed by the KFTC.