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Would be top penalty in FTC history, but final figure expected to be lower
November 14, 2009
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| Six local gas providers may be fined an estimated 1.3 trillion won ($1.1 billion) for price fixing, according to sources after a deadlocked meeting of the FTC yesterday. The figure would be the biggest fine ever imposed for unfair trade activities, but the head of the antitrust watchdog has hinted that the penalty could be significantly lower. On Thursday, the FTC held a meeting of nine top commission members to examine a report submitted by investigators and set the size of the fine. But the meeting, which went on late into the night, failed to produce a final decision due to what the commission said was the complexity of the issue and the number of problems to consider. The date of the next meeting has yet to be set, the agency said. LPG is widely used as fuel for cars and in home heating systems as well as for industrial energy. The six providers of LPG in Korea are SK Energy, E1, SK Gas, GS Caltex, S-Oil and Hyundai Oilbank. FTC investigators reportedly demanded a fine of around 1 trillion won total be imposed on the companies in the report they submitted in September. In any case of alleged unfair trade activity, the FTC sends a team of inspectors comprised of director-general-level officials to compile a report, including recommendations for appropriate penalties. Based on this, the top commission meeting then makes the final decision. Such reports are usually kept secret from the public, but the FTC revealed that the recommended fine for the six LPG providers was around 1 trillion won during a parliamentary audit of the commission last month. After Thursday’s meeting, the exact figure recommended in the report, 1.312 trillion won, leaked to the media. Specifically, inspectors asked that a fine of 313.2 billion won be imposed on SK Energy, followed by 312.7 billion won for E1 and 252.8 billion won for SK Gas. The FTC has suspected that LPG companies have been sharing their pricing information for the past six years in an effort to keep the price of the fuel at a profitable level. The FTC estimated the companies have made 24.67 trillion won in profit through the collusion. This is an assertion the LPG providers strongly deny. They claim the LPG supply chain in Korea is fixed, leaving them few ways to differentiate from their local rivals in terms of price. According to the companies, around 60 percent of the LPG consumed in Korea is supplied through imports from one company - Saudi Aramco. FTC Chairman Chung Ho-yul said yesterday that the fine to be imposed could drop sharply, as the agency plans to take into account the companies’ claims. “There could be a big difference in the size of the final fine and the fine demanded by examiners,” Chung said during an economic forum. “The commission will judge the case objectively and neutrally.” By Moon Gwang-lip [joe@joongang.co.kr] |
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