Korean regulator alleges SK Energy, Hyundai Oilbank colluded on fuel prices
In short
South Korea's Fair Trade Commission (KFTC) said on October 7 that it had opened formal proceedings against refiners SK Energy and Hyundai Oilbank, alleging they exchanged fuel pricing information and colluded on sales prices for about four years. Investigators estimate the affected sales at about 44.1 trillion won (about $33 billion), and the commission's investigation unit recommended a corrective order and financial penalties, according to reports.
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South Korea's Fair Trade Commission (KFTC) said on October 7 that it had opened formal proceedings against refiners SK Energy and Hyundai Oilbank, alleging that the two companies exchanged fuel pricing information and colluded on sales prices over a period of about four years, according to reports carried by CLS, 36Kr and Jiemian. 36Kr credited its report to Jiemian. [ 1 , 2 , 3 ]
The commission said its investigation unit had submitted a review report outlining the alleged violations and proposed sanctions, which started the commission's adjudication process. Investigators estimate that sales affected by the alleged conduct totalled about 44.1 trillion won (about $33 billion), or roughly 30 billion won (about $22.4 million) a day. [ 1 , 2 , 3 ]
The investigation unit found that the two companies' alleged conduct may seriously violate rules prohibiting price-fixing and the illegal exchange of competitively sensitive information. It recommended a corrective order and financial penalties, Jiemian and 36Kr reported; the CLS item mentions the corrective order recommendation but its text is cut off before the rest. [ 1 , 2 , 3 ]
According to the reports, South Korea's gasoline, diesel and kerosene market is highly concentrated. Last year SK Energy, Hyundai Oilbank, GS Caltex and S-Oil together held about 98% of the market, with SK Energy and Hyundai Oilbank accounting for a combined 49.1%. The reports do not include any response from the two companies, and they do not give the size of the proposed penalties or the years covered by the alleged conduct. [ 2 , 3 ]
Why it matters
The case concerns a highly concentrated market: according to the reports, four refiners held about 98% of South Korea's gasoline, diesel and kerosene market last year, with the two accused companies holding a combined 49.1%. The investigation unit's report starts the commission's adjudication process, which could end in a corrective order and financial penalties.
Key facts
- The KFTC said on October 7 it had opened formal proceedings against SK Energy and Hyundai Oilbank. [ 1 , 2 , 3 ]
- The two refiners are alleged to have exchanged fuel pricing information and colluded on sales prices for about four years. [ 1 , 2 , 3 ]
- Investigators estimate affected sales at about 44.1 trillion won (about $33 billion), or about 30 billion won (about $22.4 million) per day. [ 1 , 2 , 3 ]
- The commission's investigation unit submitted a review report setting out the alleged violations and proposed sanctions, starting the adjudication process. [ 1 , 2 , 3 ]
- The investigation unit found the conduct may seriously violate rules banning price-fixing and the illegal exchange of competitively sensitive information. [ 1 , 2 , 3 ]
- The investigation unit recommended a corrective order and financial penalties. [ 2 , 3 ]
- Last year SK Energy, Hyundai Oilbank, GS Caltex and S-Oil held about 98% of the gasoline, diesel and kerosene market; SK Energy and Hyundai Oilbank together held 49.1%. [ 2 , 3 ]
Confirmed by several sources
- The KFTC opened formal proceedings against SK Energy and Hyundai Oilbank over alleged exchange of fuel pricing information and price collusion over about four years. [ 1 , 2 , 3 ]
- Affected sales are estimated at about 44.1 trillion won (about $33 billion), about 30 billion won a day. [ 1 , 2 , 3 ]
- The investigation unit recommended a corrective order and financial penalties. [ 2 , 3 ]
- The four refiners held about 98% of the market last year; SK Energy and Hyundai Oilbank held a combined 49.1%. [ 2 , 3 ]
Still unclear
- The amount of the proposed financial penalties. The documents say penalties were recommended but give no figure.
- The exact years covered by the alleged conduct. The reports only say it lasted about four years.
- How SK Energy and Hyundai Oilbank responded. None of the documents reports a response from the companies.
- When the commission will rule. The documents say the adjudication process has started but give no timetable.