SEJONG– South Korea’s antitrust regulator said Thursday it has decided to impose a combined fine of 80 billion won (US$63.6 million) on 15 local and foreign shippers for their 17-year-long collusion to fix freight rates for South Korea-Japan routes.
The country’s top shipper HMM Co., 13 other Korean shippers and one foreign firm colluded to fix the shipping costs of container cargo services 76 times between February 2003 and May 2019, according to the Fair Trade Commission (FTC).
In a separate decision, the FTC will also order 27 domestic and foreign shipping lines to stop their price-fixing practice for South Korea-China routes, though it said it will not levy fines on them.
The shippers — 16 South Korean and 11 foreign — allegedly colluded to set freight rates 68 times between January 2002 and December 2018, according to the regulator.
The FTC said it has decided not to fine them as the fallout of their collusion on hampering competition was judged to not be large as South Korea and China have already determined the supplies of cargo ships and transport on those routes through their bilateral maritime treaty and talks.
The latest punitive actions came about five months after the FTC fined 22 Korean and foreign shippers 96.2 billion won for fixing freight rates for South Korea-Southeast Asian routes.
“The moves will help pave the way for ending shippers’ price-fixing practices that were made illegally beyond the legally permitted scope,” the regulator said.
The FTC said it will slap the largest fine of 15.8 billion won on Heung A Line Co. and 14.6 billion won on Korea Marine Transport Co.
The antitrust regulator has been at odds with shipping firms and the oceans ministry over its punitive actions against shippers’ collusion.
The South Korean shippers have insisted they are allowed to take collective actions on freight rates and other contract conditions for transportation under the country’s maritime shipping act.
But the FTC said their acts were “illegal” as they failed to meet certain criteria that are permissible under the law.
To be recognized as legitimate collective actions under the shipping act, shipping lines must report to the oceans minister within 30 days after collective behavior. They should also adequately discuss the move with a group of freight owners prior to making a report.
The FTC said the shippers covered up their collective behavior in various ways on the judgment that it could clearly violate the nation’s fair trade act.
The shipping sector has voiced concerns that the FTC’s punitive measures could deal a blow to its business and weaken the competitiveness of the industry.
The regulator said it will closely cooperate with the oceans ministry to improve the related system over shippers’ collective actions in an effort to prevent trading firms from sustaining financial damage.
Source: Yonhap News Agency