Two of South Korea’s biggest conglomerates have reached a last-minute settlement over a multibillion-dollar intellectual property dispute that had threatened to disrupt Ford and Volkswagen’s plans to build electric vehicles in the US.
The deal struck between the battery-making affiliates of LG and SK comes after the US International Trade Commission in February slapped a 10-year import ban on SK Innovation over allegations from its Korean rival of illegally acquiring sensitive technology.
The agreement marks a reprieve for Joe Biden who had until Sunday night to decide whether to make a rare presidential override of an ITC decision to avoid disruptions to the carmakers’ investment plans and protect the jobs of thousands of workers.
While a deal has been reached, further details would be announced by the companies later on Sunday, according to a person familiar with the negotiations.
The ITC ruling had allowed a grace period to give companies time to switch suppliers. But the industry had argued that the import ban would complicate carmakers’ plans to launch electric vehicles as well as hybrids, and ultimately slow the industry’s transition to environmentally friendly vehicles.
Germany’s VW and US-based Ford each have contracts to purchase batteries from SKI’s new electric vehicle battery plant in Georgia, where the Korean group has invested $2.6bn. The factory has been touted as the biggest single investment in the southern state’s history, expected to provide 2,600 jobs and clean power for 330,000 vehicle a year, including Ford’s fully electric F-150 truck.
The settlement also marks the latest twist in a years-long battle between two fiercely competitive South Korean chaebol that had become an embarrassment for the government in Seoul.
LG’s battery unit — formerly part of LG Chem but has since been spun off into LG Energy Solution — accused SKI of improperly securing lucrative contracts with the auto manufacturers based on stolen technology.
The ITC suit was launched after failed efforts in local courts.
SKI has contested the allegations and lobbied the White House to overturn the ban.
For its part, LG last month announced investments plans of $4.5bn in the US by 2025, creating more than 10,000 new jobs, in a bid to allay fears over disruptions for the import ban on SKI.
The ITC has also lambasted Ford for pursuing its deals with SK despite evidence that it had misappropriated trade secrets.
Senior officials in Seoul, including Chung Sye-kyun, the country’s prime minister, have for months been heaping pressure on the companies to reach an agreement. However, as recently as March the two sides appeared far apart over a potential settlement figure, with LG executives saying the gap was close to $1bn.