[이코노믹리뷰=박민규 기자] LG Energy Solutions and SK Innovation (096770), which are engaged in’battery litigation’ at home and abroad, are about two weeks before the final decision of the US International Trade Commission (ITC), and voices for the agreement between the two companies are increasing.
In an unusually politicized world, attention is focused on the possibility that the negotiations between the two companies, which have fallen into a stalemate, will rapidly rise while emphasizing the ending of the dispute between LG Energy Solutions and SK Innovation and harmony at the level of’K-battery’.
‘While consensus’ in politics
Prime Minister Jeong Sye-gyun rebuked the lawsuits, saying, “I am very embarrassed,” saying, “Even in the US politics, the lawsuit between LG Energy Solutions and SK Innovation is said to come out quickly,” regarding the lawsuit between LG Energy Solutions and SK Innovation at the broadcast reporter club discussion held on the 28th.
Prime Minister Jeong Sye-gyun said, “LG, SK, and Korea’s leading companies have been suing lawsuits for three years, and it is known that the litigation costs alone are worth hundreds of billions of won.” Pointed out. The fight between domestic battery makers is not only wasteful in terms of opportunities and legal costs, but also benefits only Japan and China, which are fiercely competing with Korea for battery supremacy.
Prime Minister Chung said, “Isn’t it embarrassing to meet with the chief executives of both companies on the phone and face to face?” .
He added, “The future of K-battery will be largely opened only when the two companies solve the problem quickly,” he argued. “We should not fight over small pies between domestic companies, but actively pursue a large global market.”
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Prime Minister Chung’s remarks come to the fore at a somewhat sensitive time when the US ITC’s final decision is not announced. Some argue that the intention is to pressure LG Energy Solution and SK Innovation to agree before the final decision of the US ITC is made.
Previously, LG Energy Solutions sued SK Innovation to ITC for infringing battery business secrets in April 2019, and a final decision on this is expected to be released on the 10th of next month (local time).
In fact, this is so unusual that this is the first time that government officials, especially high-ranking officials, have publicly expressed a specific position on a quarrel between companies. From this, the possibility is raised that the government will directly mediate the dispute between the two companies in the future.
LG·SK, “We will do our best to agree”
In response to Prime Minister Chung’s remarks, SK Innovation, CEO Ji Dong-seop of the battery business, directly announced, “(SK Innovation) has been sincerely engaged in all litigation with LG Energy Solutions until now, but (legal dispute) has not been able to resolve (legal disputes) to the public. I am very sorry.”
CEO Ji Dong-seop said, “(SK Innovation) is seriously accepting that it is a national wish that the Prime Minister (between LG Energy Solutions and SK Innovation) expressed great concern about the battery lawsuit.” “I will try my best to have a constructive and cooperative dialogue with LG Energy Solutions in the year and to resolve disputes smoothly.”
In addition, CEO Ji emphasized K-battery, saying, “(SK Innovation) will make efforts to make K-battery contribute to the development of the national economy and industrial ecosystem as people expect.”
LG Energy Solutions also responded to Prime Minister Jeong, saying, “In relation to the battery litigation (of LG Energy Solution and SK Innovation), we are currently making our best efforts to reach an agreement, and we will actively work to resolve the problem.”
However, LG Energy Solutions said, “There seems to be no willingness to negotiate with the proposals that SK Innovation has made until recently,” and said, “I look forward to having a proposal to discuss.”
While both companies have expressed their stance that they will do their best to reach an agreement, a subtle temperature difference is detected.
In the case of LG Energy Solutions, at one time, it took a strong attitude of’going to the end’, but now it seems that it is putting weight on agreement. LG Energy Solutions also mentioned that it has not ruled out the possibility of concluding negotiations with SK Innovation before and after the US ITC’s final decision in the 4Q 2020 business results announcement conference call held on the 27th of this month.
In addition, there is an analysis that the two companies have already entered into last-minute negotiations and are struggling over the size of the settlement amount. According to the battery industry, LG Energy Solution is known to require trillions of money, and SK Innovation is known to insist on 100 billion units. In particular, the part that LG Energy Solutions said, “I look forward to a proposal that can be discussed,” gives strength to this analysis.
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Will Prime Minister Chung’s’Bitter Sound’ speed up the LG-SK agreement?
There are mixed reactions from inside and outside the battery industry over Prime Minister Chung’s order for an immediate agreement between LG Energy Solutions and SK Innovation.
It is pointed out that it is an unreasonable pressure to demand an agreement on a massive scale from companies struggling with intellectual property rights by the politicians, and furthermore, there is a concern that it may hinder the possibility of market development.
There are many voices warning that the nature of the lawsuit will be obscured by external interventions including the government. An official in the domestic battery industry said, “If the perpetrators and victims are obscured by external intervention and reconciliation is emphasized under the name of K-battery, this will leave a bad precedent.” “LG Energy Solutions and SK Innovation will be in a lawsuit in China. It can also appear as a legal dispute between battery companies and Korean companies.”
In addition, if there is a precedent that does not cover intellectual property rights, it is highly likely that the awareness of trade secrets and patent rights will be lowered, and the efforts of companies to secure their own technology or invest in research and development (R&D) are likely to decline.
Park Yong-man, chairman of the Korean Chamber of Commerce and Industry, also said, “It is necessary to develop an advanced look at the company” in relation to the LG Energy Solution-SK Innovation litigation last month. “(The lawsuits of both companies) will be concluded by law in some form, Arbitration on the basis of evidence will be possible.” Until legal conclusions are reached, they should not intervene in disputes between companies in any way.
However, overall, the atmosphere is that the agreement between LG Energy Solution and SK Innovation is the best choice.
Regardless of the ITC’s final decision, if either side repeatedly disagrees and the two companies’ lawsuits are prolonged for 3 to 4 years or more, it is clear that the K-battery, which is currently emerging in the global market, will weaken. Not only is there a significant financial and time loss, but there is also a high concern that Japanese and Chinese companies that are pursuing Korean battery makers in the rapidly changing electric vehicle battery market will lose their leadership.
In addition, with the launch of Joe Biden’s administration, which emphasizes the environment-friendly stance in the US, LG Energy Solutions and SK Innovation, which are building batteries for electric vehicles locally, are expected to benefit enormously in the future. This is because U.S. President Biden announced that he would change all commercial vehicles to electric vehicles made in the United States, and that he would actively foster the electric vehicle market in his country.
In the case of SK Innovation, if it finally loses the ITC lawsuit, the worst-case scenario is expected to await. This is because all imports of SK Innovation’s battery cells, packs, modules and related materials in the US are prohibited. This is a crisis that could eliminate SK Innovation’s construction of a 21.5 gigawatt hour (GWh) battery plant in Georgia. SK Innovation invested a total of $2.5 billion (approximately 2.8 trillion won) for the project alone, but it is a loss considering the contract to supply batteries to be produced at the Georgia plant in the future to automakers such as Volkswagen of Germany and Ford of the United States. The cost is expected to be more than this.
It is reported that Volkswagen even sent a letter urging the Korean government to end the dispute between LG Energy Solutions and SK Innovation at the end of last year, fearing that SK Innovation’s loss could disrupt its electric car production. At the time, it is also said that Volkswagen mentioned that if uncertainties such as lawsuits between the two companies are not resolved, they will receive batteries from Chinese companies instead of SK Innovation.
It is reasonable for the government to mediate the dispute between the two companies, and the argument that if a loss of one side in the battery industry, which is considered as a national growth business, disrupts exports to the United States, is weighed on the argument that national interests cannot just sit down.
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