Prosecutors indict 6 petrochemical firms, 37 executives over W16tr price-fixing scheme

Prosecutors indicted six petrochemical companies and dozens of their executives Thursday on charges of running a price-fixing cartel worth 16.4 trillion won ($12.1 billion) over at least five years. Investigators said they confirmed the involvement of top executives, including chief executive officers, and identified the scheme as the largest cartel in South Korean history — roughly 45 days after launching a formal investigation.

The Seoul Central District Prosecutors Office's Fair Trade Investigation Division said it indicted OCI, LG Chem, Aekyung Chemical, Lotte Fine Chemical, PKC and Unid — along with 37 of their executives and employees — on charges of violating the Monopoly Regulation and Fair Trade Act.

Prosecutors sought detention for PKC's head of sales and LG Chem's division chief, both of whom were indicted in custody. Kim Yu-shin, OCI's vice chairman and CEO, former PKC CEO Jang Young-su and 33 others were indicted without detention. Hanwha Solutions had been under investigation but was ultimately excluded from the indictment, a development widely attributed to its leniency application.

According to prosecutors, the companies colluded between 2021 and 2026 to fix prices and the timing of price changes for eight petrochemical products supplied domestically — including PVC, plasticizers, caustic soda, hydrochloric acid and hypochlorite, TDI, ECH and chlorine — and pre-arranged bid prices in procurement tenders, unlawfully restricting competition.

The products targeted in the cartel are raw materials essential across a broad range of industries. Prosecutors said the scheme drove up procurement costs for downstream businesses, which in turn raised the prices of finished goods and ultimately shifted the burden onto ordinary consumers. The total value of the cartel was put at 16.37 trillion won — the largest ever recorded in the country.

Prosecutors determined that the companies primarily coordinated through team-leader-level meetings, where they agreed on the timing and scale of price adjustments and then enforced those agreements with clients. To conceal the collusion, they pre-arranged the order in which each company would send out official price-increase notices.

For large clients that purchased petrochemical products through competitive bidding, prosecutors said the companies agreed in advance on which firm would win each tender and at what price, ensuring that each maintained its existing market share while reflecting the jointly fixed price levels.

The cartel was carried out systematically through each company's internal reporting structure. When personnel changed, incoming staff were introduced to their counterparts at rival firms to ensure continuity. Some companies designated dedicated liaison officers whose sole role was to meet with competitors.

Prosecutors particularly highlighted that the Ministry of Trade, Industry and Energy had provided about 146.5 billion won in government subsidies between April and June to some of the companies to stabilize production of the cartel products, after international oil prices surged in the economic turmoil following the outbreak of the US-Iran war. Rather than using the support to ease the crisis, the companies exploited the situation as an opportunity to improve their margins and continued the collusion, prosecutors said.

Prosecutors executed search and seizure warrants on the offices of the petrochemical companies and roughly 80 individuals on Sept. 5, formally launching the investigation. They initially requested the Korea Fair Trade Commission to file complaints against eight individuals, including CEO Kim, and seven corporations. The Fair Trade Commission submitted the first complaint on Sept. 18.

Prosecutors sought arrest warrants for eight people, including CEO Kim, on Sept. 14. The court issued warrants for PKC's head of sales and LG Chem's division chief, but rejected the rest, ruling that most evidence had already been collected and that there were insufficient grounds to conclude the suspects would destroy evidence beyond the scope of their right to mount a defense. Prosecutors subsequently requested the Fair Trade Commission to file additional complaints against 29 individuals, and the commission submitted a second complaint on Tuesday.

Prosecutors said they uncovered the full scope of the largest cartel in the country's history and confirmed the participation of senior executives, including company heads, within roughly 45 days of launching the formal investigation. "Even under the restructured criminal justice system, we will work closely with the Serious Crimes Investigation Agency and other relevant bodies to ensure that individuals involved in cartel crimes that undermine the livelihoods of ordinary citizens receive appropriate punishment," a Seoul Central District Prosecutors Office official said.