South Korean shipowners are threatening legal action after regulators levied the equivalent of $62m in fines against 13 South Korean carriers and one Chinese carrier for alleged price collusion, reports Journal of Commerce.
The Korea Shipowners’ Association (KSA) is planning to take legal action against South Korea’s Fair Trade Commission (FTC) after 14 South Korean and Chinese container lines were fined. and others were admonished but not given any financial penalty. The services allegedly impacted were from South Korea to Japan and China. The roughly 150-strong group has claimed that, in fining the carriers, the FTC ignored international government-to-government agreements and South Korea’s own shipping act, which permits collaboration on freight rates.
“KSA has made it clear it will pursue litigation to correct the repeated wrong judgements by the FTC,” the association late last month.
The FTC said that, while price collaboration was allowed under South Korea’s shipping act, carriers had failed to abide by the rules by not reporting details of joint pricing to South Korea’s oceans and fisheries ministry and alerting shippers.
The FTC levied $62m in fines against 13 South Korean carriers and one Chinese carrier for alleged price fixing on South Korea-Japan routes for 17 years between February 2003 and May 2019.
Heung-A Shipping received the largest fine – $12m; followed by KMTC at $11m.
HMM and Hong Kong-listed Chinese carrier SITC were fined $38,000 and $98,000, respectively.
South Korea’s FTC also issued corrective action notices against 16 domestic and 11 Chinese carriers, including Cosco Shipping Lines, Sinotrans Container Lines, SITC, HMM, and Heung-A Shipping for alleged price-fixing on South Korea- China routes between January 2002 and December 2018. The competition watchdog said it would not impose fines in those cases because it considered there was sufficient competition on the trade and that
the impact of the alleged price fixing was not that severe.
IN a 31-page report the FTC claimed that the carriers colluded on fixing prices on freight rates, terminal handling charges, and bunker surcharges on both origin-destination and transshipment cargo. Shippers who objected to paying the agreed rates to one carrier would be refused cargo bookings by all the other carriers, claimed the FTC.
The shipowners’ association has responded that the penalties imposed by the FTC were unfair, that they would damage South Korea’s logistics network in the international supply chain, and that they had resulted in large foreign carriers avoiding South Korean ports.
