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Battery dispute

SK reiterates rejection of LG’s hefty demand for battery dispute settlement

Mar 26, 2021 (Gmt+09:00)

Lee Myoung-young, senior executive VP of SK Innovation, speaks at the AGM. 
Lee Myoung-young, senior executive VP of SK Innovation, speaks at the AGM. 

SK Innovation Co. again refused to accept LG Energy Solution Ltd.’s demand that SK pay a hefty amount of compensation for its involvement in a battery technology trade secret infringement case.

“We reiterate our position that we’re not accepting LG’s demand, which would make our battery business in the US meaningless or seriously damage our competitiveness,” Lee Myoung-young, senior executive vice president of SK Innovation, said at its annual general meeting of shareholders on Friday.

Lee’s comments come weeks after SK’s board of directors advised the company not to pay excessive compensation for a settlement with LG. The board reprimanded SK’s top management for failing to properly handle the judicial proceedings in the US, saying that the International Trade Commission didn't touch on the core issue of the dispute.

His remarks came in response to strong comments on Thursday by LG Chem Ltd. Chief Executive Shin Hak-cheol, who vowed to sternly deal with SK over the matter, demanding its rival pay “due compensation.”

Analysts said the chance of a negotiated settlement between the two is getting slimmer as the companies continue to exchange barbs.

Industry watchers say the biggest stumbling block is the sheer amount of compensation LG is demanding from SK.

LG Chem, which recently spun off its electric vehicle battery unit LG Energy Solution Ltd., is seeking at least 3 trillion won ($2.7 billion) in compensation, while SK is said to be limiting its payment to 1 trillion won.

The two South Korean EV battery makers are locked in a legal battle in the US over allegations of misappropriation by SK of LG's battery-related trade secrets.

SLIMMER CHANCE OF NEGOTIATED SETTLEMENT

Last month, the US ITC ruled in favor of LG Energy in the legal battle. Under the final verdict, the SK Group unit will be banned from importing some lithium-ion batteries and their components to the US over the next 10 years, rendering it almost impossible to run its battery plants in Georgia. The decision is subject to President Joe Biden's approval by April 11. The US president has the power to veto the ruling after a 60-day review period.

SK Innovation's EV battery plant under construction in Georgia
SK Innovation's EV battery plant under construction in Georgia

On Friday, SK Innovation also expressed regret over the ITC’s decision, saying its ruling did not properly look into whether SK really infringed upon LG’s battery-related trade secrets.

“Our batteries have never caught fire. The quality and safety of our products have been proven in the market for years,” SK said in a statement. “We’ll do our best to protect our shareholders’ interests and enhance corporate value during the rest of the legal proceedings.”

Kim Jun, CEO of SK Innovation, was absent from the shareholders’ meeting. He is said to have embarked on a US trip to meet government officials and discuss ways to persuade President Biden to exercise his veto power over the issue.

Write to Jae-Kwang Ahn at ahnjk@hankyung.com

In-Soo Nam edited this article.

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