Eight SolidWorks resellers fined W2.37b for price-fixing cartel

Eight resellers of the industrial software SolidWorks have been caught fixing prices and dividing customers among themselves, drawing sanctions from the Korea Fair Trade Commission.

The Fair Trade Commission issued corrective orders and imposed a combined fine of 2.37 billion won ($1.57 million) on Thursday against eight companies — Nodedata, Maven, Solco, Webs System Korea, Weavermancy, K&Solution, Hanyoung Solutech and Prism — for violating the Fair Trade Act.

The eight companies together hold in effect the entire domestic SolidWorks reseller market. An investigation found that at a CEO-level meeting in August 2021, they set minimum selling prices by product category to reduce competition and improve profitability.

The firms also agreed not to poach each other's customers. Existing clients or those with whom a reseller had first begun doing business were off-limits to rivals. When a customer sought competing quotes, the other firms submitted inflated bids above a set threshold to avoid genuine price competition.

The cartel continued through July 2024, with members regularly discussing minimum prices and maintenance fee increases through in-person meetings and mobile messaging apps. The scope of protected customers expanded gradually over time. The group also ran an internal enforcement mechanism: any member that sold below the agreed minimum price was required to cover the price difference, and a firm that violated the rules three or more times was expelled from the sales network.

The collusion drove SolidWorks prices consistently higher. The average selling price of SolidWorks CAD, the flagship product, rose 53.81% in the third quarter of 2023 compared with the second quarter of 2021, before the cartel began.

The cartel emerged after Dassault Systemes Korea, the developer of SolidWorks, had granted exclusive sales rights for specific customers to individual resellers — an arrangement that drew a fine from the Fair Trade Commission in late 2020. As competition among resellers intensified following that ruling, prices fell and margins deteriorated, prompting the companies to begin jointly managing prices and customer territories, the commission concluded.

The Fair Trade Commission said the action would help correct collusive practices in the industrial software retail market and support corporate innovation and industrial competitiveness. "We will continue to monitor the industrial software market, which is closely tied to business activity, for signs of collusion, and will respond strictly whenever violations are confirmed," a commission official said.