Refiners accused of 26 trillion won price-fixing cartel

South Korean prosecutors have indicted an employee of HD Hyundai Oilbank for allegedly colluding with SK Energy to inflate domestic oil prices, a move that comes amid widespread public hardship due to high fuel costs. The alleged price-fixing scheme involved exchanging sensitive pricing information and coordinating supply cost increases, particularly following the U.S.-Iran conflict.

The Seoul Central District Prosecutors' Office announced on June 6 that it had indicted two employees from HD Hyundai Oilbank's pricing division. An employee from SK Energy, involved in the alleged collusion, was excluded from indictment under a leniency program for whistleblowers. According to the investigation, the two companies designated specific personnel to exchange price data from July 2024. After the U.S.-Iran conflict erupted in late February, they simultaneously raised domestic supply prices significantly.

Prosecutors revealed chat logs showing employees discussing the price hikes. One message read, "Raising prices by another 100 won today. We'll probably make 2 trillion won this year," while another stated, "A company that lives off war. Long live Trump." While consumers and the government grappled with the economic shock and household burdens of rising global oil prices, these companies allegedly saw it as an opportunity to maximize profits. GS Caltex and S-Oil also raised prices in line with the other two, but escaped indictment due to insufficient direct evidence. The prosecution estimates that the four major refiners collectively reaped approximately 26 trillion won through such collusive practices.

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Raising prices by another 100 won today. We'll probably make 2 trillion won this year.

The investigation shed light on why domestic gas prices surged almost immediately after the U.S.-Iran conflict, despite the typical two-to-three-week lag caused by existing crude oil inventory. This pattern of domestic prices rising quickly during oil price surges and falling slowly during declines has allegedly been facilitated by the refiners' collusion. Prosecutors emphasized the need to thoroughly eradicate such practices.

Additionally, the four major refiners are facing legal action for allegedly forcing gas stations to purchase petroleum products exclusively at prices determined by the refiners under full purchase contracts. The refiners reportedly filed lawsuits for substantial penalties, ranging from 10% to 30% of sales, for breaches of these contracts, which prosecutors described as typical "갑질" (gapjil, or abusive power) and unfair trade. Despite these alleged profiteering activities through collusion and forced sales, the refining industry has recently claimed losses of up to 5 trillion won due to the implementation of a petroleum price cap system, a claim that warrants thorough scrutiny.

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A company that lives off war. Long live Trump.