800 billion in fines? Fair Trade Commission Concludes Today’s Level of Sanctions on Shipping Companies’ Freight Fixing

Fair Trade Commissioner Cho Seong-wook is presiding over the plenary meeting. Provided by the Fair Trade Commission

The Fair Trade Commission today decides on the level of sanctions for freight-fixing cases involving 23 domestic and foreign shipping companies. The Fair Trade Commission will hold a plenary meeting on the 12th and deliberate on allegations of violations of the Fair Trade Act (the Monopoly Regulation and Fair Trade Act) by 23 shipping companies. The plenary meeting is the highest decision-making body attended by the Fair Trade Commissioner and others. The decision of the Fair Court plenary meeting has the same effect as the first judgment of the Judiciary.

The case started in 2018 when the timber import industry reported to the Fair Trade Commission that domestic shipping companies were alleging suspicions of collusion, such as raising the freight price for Southeast Asian routes all at once. After three years of investigation, in May of last year, the FTC reported that a total of 23 shipping companies, including 12 domestic shipping companies such as HMM (formerly Hyundai Merchant Marine) and SM Merchant Marine, had fixed shipping charges for the Korea-Southeast Asian route between 2003 and 2018. A review report (corresponding to the prosecution’s indictment) was sent out stating that a fine of about 800 billion won was imposed.

In response, the shipping industry protested, saying, “The rigging stipulated by the Fair Trade Commission is a legitimate act of adjusting freight rates together.” The Ministry of Oceans and Fisheries also gave an authoritative interpretation to the effect that there was no need to report the 122 detailed consultations that became a problem in July. The controversy escalated as politicians intervened. Last year, an amendment to the Shipping Act was proposed to prevent punishment under the Fair Trade Act even if shipping companies commit collusion. The case drifted for a long time as the Fair Trade Commission postponed the decision on the level of sanctions amid an all-round offensive from the shipping industry, the Ministry of Oceans and Fisheries, and the political circles. Even if shipping companies are sanctioned in consideration of such strong backlash, the industry believes that the level of sanctions, such as a reduction in the size of the fine, will be significantly lowered. Meanwhile, at a press conference held in November of last year, the Shipping Association announced that “If the Fair Trade Commission decides to impose a fine, the association will proceed with administrative litigation until the result of the acquittal.”


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