FTC to rule on shipper price-rigging allegation next month

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The Fair Trade Commission is expected to decide next month on punitive measures against major shippers following allegations that domestic and foreign shipping companies rigged freight charges.

According to government sources on Sunday, the FTC plans to hold a full membership meeting to discuss whether the 23 accused companies have colluded to increase shipping costs for service on an Asian sea route. from the South East. The allegation was first reported to the FTC by importers in the lumber industry in 2018.

A full membership meeting is one where a conclusion is reached, after an investigation and hearing with the accused. This could happen before the end of August, the sources said.

In May, the FTC sent screen reports to shippers, including Korean shipping company HMM Co., Korea Marine Transport Co., and Sinokor Merchant Marine Co., advising them that they may have broken the law on the ship. Fair trade.

The watchdog report also said that each company could be fined up to 10% of annual sales, and the penalty can be up to 800 billion won ($ 684 million).

The accused companies strongly resisted, claiming that their joint action to fix prices is legitimate under the law on maritime transport. They also fear that the excessive amount of penalties could lead to the bankruptcy of companies.

The law states that shippers can take collaborative action when reaching an agreement on freight rates, allocation of vessels, stowage of cargo and other conditions of carriage, when they meet certain conditions.

By law, licensed companies must exchange sufficient information on transport conditions with the shippers’ association and declare their agreement to the Department of Oceans and Fisheries. Companies should not be barred from unreasonably participating in or withdrawing from the deal, he adds.

Shipping service providers say that due to the distinct nature of the industry, collaborative action is needed to prevent a monopoly in the market. Failure to set an agreed standard of operating conditions can lead to excessive competition, and only the strongest will survive, an industry official said.

The antitrust watchdog, however, believed that shipping companies were working together to set operating conditions to exceed the legal standard.

As opinions are divided on the case, lawmakers sided with the shippers, proposing a revision bill not to apply the fair trade law to activities carried out under the maritime transport law.

The review bill, introduced by a ruling Democratic Party of Korea MP, is expected to be presented to a parliamentary subcommittee in September. Even if it runs through legislative procedures, it is unlikely to go into effect to save senders from the FTC’s ruling, should it decide to sanction them.

The FTC is also against the overhaul bill because it believes the proposal would literally allow shipper bid rigging.

By Jo He-rim ([email protected])

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