LG-SK seems to negotiate only when battery lawsuit results come out… The deadline for agreement is ’60 days after judgment’

Input 2021.02.05 06:00

LG Energy Solution (formerly LG Chem (051910)Battery Business Division) SK innovation (096770)The prospect that the two sides will negotiate only after the results of the lawsuit are weighed on the lawsuit for infringement of the electric vehicle battery trade secrets. Since both sides are not 100% sure of the outcome of the lawsuit, it is highly likely that they will sit face to face at the negotiating table after confirming the outcome of the lawsuit.

According to industry sources on the 5th, the US International Trade Commission (ITC) will make a final decision on the lawsuit for infringement of trade secrets between the two companies on the 10th of this month (local time). It has been a year since ITC issued a’Default Judgment’ to SK Innovation in February of last year. ITC has postponed the final decision three times, but it is said that it is highly likely to make a decision this time. If the result of the lawsuit comes out on that day, it takes effect after 60 days, so LG and SK must agree within 60 days. If the two companies agree on this period and drop the lawsuit, there is no need to follow the results of the lawsuit.

Recently, as Prime Minister Chung Sye-gyun strongly demanded negotiations between the two companies, it was predicted that an agreement would be reached dramatically before the outcome of the lawsuit comes out, but it is unlikely that an agreement will be reached before the 10th.

It is reported that LG Energy Solutions demands compensation of 2.8 trillion won from SK for infringement of trade secrets, while SK is known to have offered hundreds of billions of won. Since the compensation gap is more than 2 trillion won, both sides are “proposing that the other party cannot accept.”

ITC decisions can be vetoed by the President of the United States within 60 days. If the President of the United States does not exercise his veto, it takes effect after 60 days. SK or LG can appeal the ITC ruling to the U.S. Federal Court of Appeals, but it will take effect after 60 days. For this reason, the two companies must close within 60 days to reach an agreement through negotiations.

After the final ruling is issued, the size of the settlement is expected to be different from now. If SK’s ITC preliminary decision is cited as it is and loses, the battery business in the US will be severely damaged. The import of batteries as well as related parts in the United States is completely banned, making it impossible to operate factories in Georgia. Since it has already received orders of tens of trillion won from automakers, if it cannot be delivered to these companies, it is necessary to ask for astronomical damages. In fact, it is not an exaggeration to say that the electric vehicle battery business is impossible. In the meantime, ICT has never reversed its decision to lose early.

However, the ITC admits the decision to lose early, but if it says that it will additionally consider whether it is’public’, such as the impact on local jobs or the economy, or if a’Remand’ decision is made for a preliminary decision It gets complicated. As the lawsuit is entering a new phase, the possibility of an agreement between the two sides becomes even more slim.

A business official said, “The two sides may be able to reach a dramatic agreement this weekend, but Prime Minister Chung’s remarks have stimulated the parties even more.” “I said.