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SK-LG battery settlement shows how industrial symbiosis matters

SK-LG battery settlement shows how industrial symbiosis matters

Posted April. 12, 2021 07:43,   

Updated April. 12, 2021 07:43


LG Energy Solution and SK Innovation have managed to settle a trade secret litigation. Each South Korean conglomerate held a separate board meeting to approve a motion that the ongoing litigation is dropped on the condition that SK pays LG two trillion won in compensation. With this conclusion, they finalized a three-year-long fight. It is good news that the two major South Korean firms put an end to a chicken game. However, it may only be one of a long line of disputes between South Korean companies that can occur anytime. Taking this as a good lesson, is it important to build business practices where two parties compromise in the interest of the nation.

In a lawsuit by LG Energy Solution against SK Innovation, the International Trade Commission (ITC) ruled in February for the plaintiff that SK Innovation will be banned from producing and importing batteries from the United States for the next 10 years on the grounds that it invaded trade secrets. The ruling was set to be confirmed officially unless U.S. President Joe Biden gives it a veto by April 12. The U.S. government reportedly pressed the two South Korean companies to settle their disagreement before the veto's deadline, probably because a consequent withdrawal of SK from Georgia will affect domestic EV supply networks and the job market. The settlement may have been made mainly due to Washington's interest-driven pressures.

The two tech firms spent hundreds of billions of won on the legal dispute and related lobbying activities. With uncertainty over who will win, investment plans were held back amid confusion. The self-harming battle put South Korea's status in the battery market at risk. Indeed, China's CATL has since this year climbed on top of the battery industry with the largest market share, followed by LG Energy Solution. European carmakers have announced to choose self-developed batteries over South Korean ones. Behind all such negative developments are growing uncertainties over the supply of South Korean batteries due to the legal battle between LG and SK.

Using this as an opportunity, LG and SK are supposed to find ways to cooperate further. As both of them produce pouch-type batteries, there is enough room where they can join hands to develop new battery technologies in fight against Chinese battery makers. They may consider opening up high-level dialogue channels based on strategic partnerships. The Unites States, European nations and China show a great example of how the government and businesses work on a united team to safeguard national interests. A lessen taken: If South Korean businesses keep their guards up against one another in the global market, it is their common foe who benefits in the middle.