FTC moves to sanction SK Energy, HD Hyundai Oilbank over fuel price fixing
SK Energy and HD Hyundai Oilbank face severe potential penalties over alleged price fixing involving 44.1 trillion won ($32.8 billion) in fuel sales, but the refining industry dismissed the claims as “unreasonable.”
SK Energy tanker trucks are seen outside the Seoul branch of the Daehan Oil Pipeline Corporation in Seongnam, Gyeonggi, on March 13, the first day of the government's price cap on petroleum products. The Fair Trade Commission's examiner concluded that SK Energy and HD Hyundai Oilbank agreed on specific sales prices twice that month.YONHAP
The Fair Trade Commission (FTC) has moved to sanction SK Energy and HD Hyundai Oilbank for allegedly colluding gasoline, diesel and kerosene prices from 2022 to earlier this year, in a case covering 44.1 trillion won ($32.8 billion) in related sales.
The refiners argue the regulator has twisted publicly available information and the industry's standard post-settlement pricing into evidence of collusion.
The FTC's secretariat submitted its examination report on the case, the equivalent of an indictment, to the commission and sent it to the two companies on Wednesday.
In the report, the FTC's examiner found that the two refiners regularly exchanged pricing information on petroleum products, including deposit prices, final prices and sales policies. A deposit price is the provisional price a refiner charges gas stations and wholesalers when it supplies them with fuel. Early the following month, the refiner sets the final price and settles the difference.
The exchanges ran for about four years, from February 2022, just before Russia invaded Ukraine, to March this year, shortly after war broke out between the United States and Iran. Sales affected over that period averaged about 30 billion won a day. The examiner also concluded that the two companies agreed on specific sales prices twice in March.
The FTC deemed the conduct a “serious” violation of the Monopoly Regulation and Fair Trade Act's bans on price fixing and information exchange, and recommended a corrective order and a surcharge. The rules allow a surcharge of up to 10.5 percent of related sales for a violation of that severity, which means the surcharge could reach 4.63 trillion won.
Cars line up to refuel at a gas station at the Seoul Mannamui Gwangjang Service Area in Seocho District, southern Seoul, on Sept. 27.YONHAP
GS Caltex and S-Oil were also investigated but spared sanctions because allegations against them could not be proven. Prosecutors separately indicted HD Hyundai Oilbank and SK Energy in July on charges of colluding on wholesale prices after the Iran war broke out. GS Caltex and S-Oil were indicted along with them over supply contracts and post-settlement practices that allegedly limited gas stations' choice of supplier.
“International oil prices swing sharply in wartime, and we believe that may have served as one of the triggers for the start of the information exchange,” Oh Haeng-rok, director-general of the FTC's Cartel Investigation Bureau, said.
The effect on what consumers paid at the pump “has not been analyzed precisely,” Oh said, though “if the prices supplied to gas stations changed, I think consumer prices were also affected to some extent.”
SK Energy, HD Hyundai Oilbank, GS Caltex and S-Oil together held about 98 percent of the domestic gasoline, diesel and kerosene market last year. SK Energy's share was 28.1 percent and HD Hyundai Oilbank's 21 percent, for a combined 49.1 percent.
A person fuels a car at the Seoul Mannamui Gwangjang Service Area on the Gyeongbu Expressway in Seocho District, southern Seoul, on Sept. 23.NEWS1
The refining industry rejected the case as “an unreasonable application of the law that fails to understand the distribution structure of petroleum products.”
Refiners across the industry routinely use the post-settlement system. They usually notify gas stations and dealers of deposit prices once or twice a week, and the figures are shared in station owners' online communities.
“Deposit price information is public,” an industry source said. “The two companies did not coordinate before setting prices. After they had already set their prices, they merely exchanged remarks along the lines of 'this is what we set.'”
Fuel prices generally track international prices, and because Korean refiners have similar cost structures, their prices tend to move in similar patterns.
“For collusion to exist, there has to be an act of jointly deciding prices,” another industry source said. “They only shared prices that had already been decided. They did not set prices together in advance.”
Another argument is that SK Networks, an SK affiliate, handed over its gas station operations and the related staff to HD Hyundai Oilbank in 2020 as part of an asset sale. Some argue that the FTC has gone too far in treating routine contact between former colleagues as “prior information exchange for collusion.”
Both companies stated that they “take the submission of the examination report seriously,” and would actively explain the facts and legal issues during the FTC's deliberations.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
