Heavy Fines Imposed on Korea-Japan Route Shipping Companies...Strong Backlash from Shipping Industry

Fair Trade Commission Announces Review Results on Korea-China-Japan Route Fare Collusion
"Will Mark a Turning Point in Ending Illegal Fare Collusion Practices"
Korea Shipping Association: "Unprecedented Fare Collusion Sanctions on Korea-Japan and Korea-China Routes Must Be Withdrawn"

[Asia Economy Reporter Yoo Hyun-seok] The domestic shipping industry strongly opposed the Fair Trade Commission's announcement of sanctions on the 'Korea-Japan and Korea-China route domestic and international container liner shipping freight cartel.' This is because shipping companies on the Korea-Japan route, which kept the base freight rate at the minimum level for 17 years while raising various ancillary charges, were fined 80 billion KRW by the Fair Trade Commission.

According to the industry on the 10th, the Fair Trade Commission imposed an 80 billion KRW fine on 15 domestic and foreign shipping companies for violating procedures such as failing to report ex post to the Minister of Oceans and Fisheries, and for raising freight rates a total of 76 times on the Korea-Japan route from February 2003 to May 2019.

The fines imposed on 14 domestic shipping companies and 1 foreign shipping company that colluded on freight rates on the Korea-Japan route are as follows: Heung-A Line (15.775 billion KRW), Korea Shipping (14.612 billion KRW), Janggeum Shipping (12.03 billion KRW), Nam Sung Shipping (10.836 billion KRW), Dongjin Shipping (6.141 billion KRW), Cheonggyeong Shipping (5.456 billion KRW), Dongyoung Shipping (4.128 billion KRW), Beomju Shipping (3.288 billion KRW), Panstar Line.com (3.256 billion KRW), Pan Ocean (2.537 billion KRW), Taeyang Shipping (1.771 billion KRW), SITC Container Lines (China, SITC, 127 million KRW), SM Shipping (109 million KRW), and HMM (49 million KRW).

The Fair Trade Commission also issued corrective orders for cartel allegations on the Korea-China route. The reason is that 27 domestic and foreign shipping companies colluded and raised freight rates 68 times over 17 years on the Korea-China route. The 16 domestic shipping companies that colluded on freight rates on the Korea-China route are Korea Shipping, Nam Sung Shipping, Dongyoung Shipping, Dongjin Shipping, Doo Woo Shipping, Beomju Shipping, SM Shipping, HMM, Janggeum Shipping, Cheonggyeong Shipping, Taeyang Shipping, Pan Ocean, Han Sung Line, Heung-A Line, Heung-A Shipping, and Jincheok International Cargo Shipping.

The Korea Shipping Association called the measures unfair and urged immediate withdrawal. In a statement released the previous day, the association said, "Only our country's Fair Trade Commission has imposed unprecedented sanctions, which will ultimately harm the Korean network in the international logistics supply chain," and added, "This is a unilateral sanction contrary to international customs and laws."

It continued, "This Fair Trade Commission decision raises concerns about the collapse of our shipping industry and the avoidance of domestic ports by large foreign shipping companies," and predicted, "It will cause an increase in maritime transportation costs for import and export cargo and disrupt timely transportation for shippers."

The association pointed out that in 2004, the Fair Trade Commission judged that "joint actions among shipping companies are legitimate acts under the Shipping Act, and procedural issues regarding agreements fall under the jurisdiction of the Shipping Act," calling the current sanctions a self-contradiction by the Fair Trade Commission.

The association urged immediate withdrawal of the unprecedented sanctions on liner shipping companies' freight collusion worldwide. The Shipping Association stated, "While China, Japan, and others have taken no action, only our Fair Trade Commission imposed sanctions, which is an unfair measure that could harm the Korean logistics network in the international logistics supply chain," and claimed, "This is a unilateral sanction contrary to international customs and laws."

It added, "Applying the Fair Trade Act while ignoring the legal principles of the Shipping Act and judging joint actions as unfair despite legitimate consultations and reports under the Shipping Act contradicts the legislative intent of the Shipping Act," and criticized, "No country in the world has ever questioned consultations and reports."