South Korea shipowners deny government price-fixing charge

Date: Tuesday, February 8, 2022
Source: Lloyd's List

The Fair Trade Commission has accused 23 local and foreign shipping firms of colluding to set container cargo charges on South Korean-Southeast Asian routes. The claim is rejected by shipowners and maritime groups.

SHIPOWNERS and maritime groups in South Korea have vowed to fight a government charge that 23 local and foreign container shipping carriers engaged in illegal price fixing.

The Federation of Korea Maritime Industries and the Korea Shipowners’ Association said no unfair collusion to raise prices took place over 15 years, as alleged by the antitrust agency.

The controversy “stems from the wrongful use of the law by the Fair Trade Commission”, they said.

“The Korea Shipping Act permits joint acts as long as they do not unreasonably restrict joining and withdrawing from joint acts, which the FTC ignored,” said Young-Moo Kim, vice-chairman of the Federation of Korea Maritime Industries and executive vice-chairman of the Korea Shipowners’ Association.

He said the Ministry of Oceans and Fisheries, which oversees the shipping industry, sees no problem in the joint action of shipping firms in this case, “and they performed legal joint actions under the ministry’s supervision”.

Mr Kim told Lloyd’s List that the ministry tried to resolve the issue with the commission amid “differences in positions among government ministries regarding consultation with shippers and the government’s reporting procedures” under the act.

He said shipowners and maritime industries will raise their dispute with the commission to the country’s highest court if it is not resolved among relevant government agencies.

“If there is no progress in consultations between relevant government ministries, administrative litigation will proceed, and if sanctions are not lifted in the administrative litigation, appeal to the Supreme Court cannot be ruled out,” he said.

In the past month, the FTC announced combined penalties of Won96.2bn ($80.7m) on 23 domestic and foreign container shipping companies, which it accused of colluding to fix freight rates between 2003 and 2018.

The antitrust agency said 12 local and 11 foreign firms colluded to set the prices of container cargo services on South Korean-Southeast Asian import and export routes 120 times.

It alleged that all 23 companies set a common set of freight rates, including the minimum basic freight rate.

However, shipowners and maritime groups rejected the FTC’s assertion, saying the 23 companies did not engage in illegal collusion.

They said the concerned firms “did not unreasonably restrict competition or take unfair advantage of their joint actions, and they did not harm shippers”. They lamented the antitrust agency’s punitive action, saying it would damage the international stature of the affected companies.

“Due to these measures, these shippers will be recognised as unjust co-actors, which will adversely affect their international reputation and they are concerned that their business activities for global shippers will be adversely affected,” according to Mr Kim.

The shipowners and maritime groups said the FTC’s unilateral interpretation of the law has raised the industry’s concern and reflected a problem in the application of the law.

They added that the FTC has recognised problems in the interpretation and application of the law, prompting the agency to announce that it would exert efforts to reflect the content in amendments to the shipping law.

The South Korean shipping firms affected by the FTC antitrust action include Pan Ocean, Korea Shipping, and Namseong Shipping, while the foreign companies include Evergreen Marine Corporation, Wan Hai Lines, Yang Ming Marine Transport Corporation and Sealand Maersk Asia.

 

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