South Korea’s Fair Trade Commission has found collusion and price-fixing among shipping companies operating between South Korea, Japan, and China.
As a result, it announced more than $63 million in fines against 15 shipping companies operating routes to Japan while also ordering the companies sailing to China to stop their actions restricting competition on the routes.
According to the FTC, “these moves will help pave the way for ending shipper’s price-fixing practices that were illegal beyond the permitted scope of cooperation.” As it explained, there are 76 instances on the Japan routes between February 2003 and May 2019. They showed how companies agreed on various freight rates, including the lowest level for basic freight rates, the introduction and increase of various rates, and bidding prices for larger shippers.
On the other hand, the shipping companies argued that under Korean law they are permitted to take collective actions on freight rates. Specifically, they claimed that the rules under the maritime shipping act allow collaboration and further changes in the law enacted by South Korea’s parliament.
The 15 shipping companies included in the punitive action the FTC reported controlled between 86 and 93% of the market. HMM was the largest company included in the action, but with a comparatively small fine of just $39,000 because of its limited role on the routes.
The largest fines reached $12 million for several domestic shipping companies, including Korea Marine Transport, Heunga Line, Goryeo Shipping, Janggeum Merchant Marine, and Namsan Shipping.
In addition, SM Merchant Marine was fined $150,000 and Hong Kong-based SITC Container Lines was the only international firm included with a fine of approximately $100,000.
The FTC also found similar examples of collusion between 16 domestic and 11 foreign shipping companies operating between South Korea and China. Those 27 shipping companies are believed to have controlled between 70 and 84% of the market.
In these case, the FTC ordered them stop these business practices and did not fine them due to the circumstances on the Chinese routes.
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