South Korea Nears Conclusion of Gas Station Collusion Probe

In response to rising fuel prices exacerbated by geopolitical tensions, South Korea's Fair Trade Commission (KFTC) is set to conclude its investigation into suspected price-fixing cartels among gas stations. KFTC Chairman Joo Sung-wook confirmed that the probe, which has examined gas stations in key regions including Busan, Gyeongbuk, Jeju, and Gyeonggi, is in its final stages. The findings are expected to lead to significant penalties, such as corrective orders and substantial fines, for any entities found in violation of fair trade laws.

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We conducted on-site inspections into collusion among gas stations in Busan, Gyeongbuk, Jeju, and Gyeonggi regions. The relevant investigation will be concluded soon, and corrective orders or fines will be imposed.

The KFTC's focus on these specific regions stems from patterns of unusually synchronized price changes and abnormally high prices compared to other areas. This targeted approach underscores the commission's commitment to ensuring a competitive market and protecting consumers from unfair pricing practices, especially during times of economic volatility. The swiftness of the investigation signals the KFTC's determination to address potential collusion that could unfairly burden the public.

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We investigated areas where price changes between nearby gas stations were similar, and areas where prices were excessively high compared to other regions.

Beyond the immediate gas station probe, Chairman Joo also provided an update on the ongoing review of the exclusive prosecution system. This reform aims to streamline the legal process by allowing investigations and prosecutions for certain Fair Trade Act violations to be initiated by entities other than the KFTC, potentially increasing the number of cases brought to light. The commission is actively gathering industry feedback to refine these proposals, balancing the need for robust enforcement with the goal of rationalizing criminal sanctions in favor of economic penalties, a move that aligns with international best practices.

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More specific timelines can be established once reforms to the criminal justice system, such as the adjustment of investigative and prosecutorial powers between the police and prosecution, are completed. Before that, we will listen to industry opinions and prepare specific plans centered around the Fair Trade Commission.

This dual focus on immediate market conduct and long-term regulatory reform highlights the KFTC's proactive stance in maintaining economic fairness. The investigation into gas stations demonstrates a commitment to consumer protection, while the proposed changes to the prosecution system signal a forward-thinking approach to competition policy. From a South Korean perspective, these actions are crucial for stabilizing the economy and ensuring that businesses operate ethically, especially in sectors vital to daily life.

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In Korea, too many criminal penalty provisions are applied to the Fair Trade Act, but in other developed countries, penalties are imposed only for serious violations. This is being done in conjunction with the so-called rationalization of criminal penalties, where unnecessary criminal sanctions are removed and replaced with economic sanctions.