ID :
187360
Thu, 06/09/2011 - 05:54
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Shortlink :
https://oananews.org//node/187360
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Hyundai, Kia under probe for forcing suppliers to cut prices
SEOUL (Yonhap) - South Korea's antitrust watchdog is probing top automaker Hyundai Motor Co. and its affiliates over suspicions that they forced subcontractors to cut supply prices by using their market-dominating power, officials said Thursday.
Kia Motors Corp., Hyundai Motor's sister company and the nation's second-largest automaker, and Hyundai Mobis Co., an affiliate of Hyundai Motor Group, are also under investigation, according to the officials at the Fair Trade Commission (FTC).
"FTC investigators visited the head offices of the companies in southern Seoul on Tuesday and secured related documents," they said.
Hyundai Motor and Kia Motors usually have price-setting negotiations with around 2,000 subcontractors twice a year. They completed their latest negotiations last month, industry sources said.
Some industry watchers, however, called such talks a mere "formality," arguing that the automaking giants use their market power to twist the arms of subcontractors to reduce prices for their parts supplies.
Hyundai and Kia dismissed the allegations, saying price cuts, if any, would be part of efforts to reduce their production costs and that any such price cuts would be carried out through negotiations with their partners.
In 2006, the FTC fined Hyundai Motor about 1.6 billion won (US$1.5 million) on similar charges. The automaker dismissed the charges, but a Seoul court upheld the FTC's ruling last month.
Shares of Hyundai and Kia dived on the news of the FTC investigation. Hyundai and Kia fell 2.38 percent and 1.41 percent, respectively, on Seoul's main bourse as of 9:50 a.m.
Kia Motors Corp., Hyundai Motor's sister company and the nation's second-largest automaker, and Hyundai Mobis Co., an affiliate of Hyundai Motor Group, are also under investigation, according to the officials at the Fair Trade Commission (FTC).
"FTC investigators visited the head offices of the companies in southern Seoul on Tuesday and secured related documents," they said.
Hyundai Motor and Kia Motors usually have price-setting negotiations with around 2,000 subcontractors twice a year. They completed their latest negotiations last month, industry sources said.
Some industry watchers, however, called such talks a mere "formality," arguing that the automaking giants use their market power to twist the arms of subcontractors to reduce prices for their parts supplies.
Hyundai and Kia dismissed the allegations, saying price cuts, if any, would be part of efforts to reduce their production costs and that any such price cuts would be carried out through negotiations with their partners.
In 2006, the FTC fined Hyundai Motor about 1.6 billion won (US$1.5 million) on similar charges. The automaker dismissed the charges, but a Seoul court upheld the FTC's ruling last month.
Shares of Hyundai and Kia dived on the news of the FTC investigation. Hyundai and Kia fell 2.38 percent and 1.41 percent, respectively, on Seoul's main bourse as of 9:50 a.m.
