Investigating Price Collusion of Four Oil Companies

The Korea Fair Trade Commission (KFTC) started to investigate on August 16 whether four domestic oil companies colluded on an oil price increase.

The KFTC investigated whether the SK Corporation, LG-Caltex, the Hyundai Oilbank, and the S-Oil Corporation consulted one another in the recent round of oil price increases by dispatching investigators to their head offices.

Heo Seon, director general of the KFTC`s competition bureau, said, “We started to investigate in the field as there is a possibility the oil companies’ collusion during the recent oil price hike in our judgment. There could be a supplementary investigation, but we’ll finish this investigation as soon as possible.”

The head of the KFTC, Kang Chul-gyu, was also known to have ordered an investigation in an executive session this day to find out whether the oil industry colluded in relation to the oil price increase.

The Finance Minister and Deputy Prime Minister Lee Hun-jai instructed the investigation in an extended executive session, where the Administrators such as the Director of the Office of National tax Administration participate, by saying, “There is an opinion that it is hard to lower a tax while the oil price has recently rose. There needs be an examination, cooperating with the KFTC, in regard to a report that oil companies are making a good profit.”

The oil industry refutes this, saying, “Collusion on oil prices cannot be possible because there is no room for making a profit when 65 percent of the current oil price is taxes. Moreover, increased profits over the first half of the term are due to the increased demand of countries such as China.”

Yong Park parky@donga.com