Two of South Korea’s largest conglomerates have reached a last-minute settlement over a multibillion-dollar intellectual property dispute that threatened to disrupt Ford and Volkswagen’s plans to build electric vehicles in the United States.
The deal between LG and SK’s battery manufacturing subsidiaries comes after the U.S. International Trade Commission in February. slapped a 10-year import ban on SK Innovation following allegations by its Korean rival of illegally acquiring sensitive technologies.
SK will pay LG Won2tn ($ 1.8 billion) in cash and running royalties, the companies said in a joint statement on Sunday.
The deal marks a reprieve for Joe Biden who had until Sunday night to decide whether to do it a rare presidential waiver of a decision by the ITC to avoid disrupting the investment plans of automakers and protecting the jobs of thousands of workers.
Raphael Warnock, the Democratic senator from Georgia who had lobbied the Biden administration and businesses over the dispute, said the resolution “would help advance the local economy.”
“It has always been clear that the best way to protect trade workers – and the jobs promised to Georgians – is for the companies involved to negotiate a settlement in good faith,” he said.
As part of the deal, the companies also agreed to drop all pending litigation and pledged not to sue each other over the matter for the next 10 years.
The ITC decision granted a grace period to give companies time to switch suppliers. But the industry had argued that the import ban would make it harder for automakers to launch electric vehicles as well as hybrids, and ultimately slow the industry’s transition to environmentally friendly vehicles.
Germany VW and the American company Ford each have contracts to buy batteries at SKI’s new electric vehicle battery plant in Georgia, where the Korean group has invested $ 2.6 billion. The plant has been touted as the largest investment in the history of the southern state, which is expected to provide 2,600 jobs and clean energy for 330,000 vehicles per year, including Ford’s all-electric F-150 truck.
The settlement also marks the latest twist in a multi-year battle between two fiercely competitive South Koreans. chaebol it had become an embarrassment for the government in Seoul.
LG’s battery unit – formerly part of LG Chem but has since been turned into LG Energy Solution – accused SKI of inappropriately securing lucrative deals with automakers based on stolen technology.
ITC’s action was launched after efforts by local courts failed.
SKI disputed the allegations and pressured the White House to overturn the ban.
For its part, LG last month investment plans announced $ 4.5 billion in the United States by 2025, creating more than 10,000 new jobs, in an effort to allay fears of disruption over the import ban on SKI.
ITC also blasted Ford for pursuing its agreements with SK despite evidence that it had misappropriated trade secrets.
South Korea’s Commerce Ministry welcomed the decision on Sunday.
Senior officials in Seoul, including Chung Sye-kyun, the country’s prime minister, have been pressuring companies for months to reach a deal. However, as recently as March, the two sides looked wide apart on a potential settlement figure, with LG executives saying the gap was close to $ 1 billion.
Additional reporting by Song Jung-a, Kiran Stacey and Peggy Hollinger