Four Major Oil Refiners Indicted Over 26 Trillion Won Price-Fixing Scheme Following Iran Conflict

Domestic oil refiners and their employees have been indicted on charges of colluding to drive up oil prices immediately following the conflict between the United States and Iran.
The Seoul Central District Prosecutors' Office, led by Chief Prosecutor Na Hee-seok of the Fair Trade Investigation Department, announced today (July 6) that it has indicted HD Hyundai Oilbank and two employees from its pricing department for violating the Fair Trade Act. The charges stem from their coordination of the timing and scale of price hikes, which led to a sharp increase in oil prices shortly after the conflict began.
It was found that SK Energy and its relevant employees, who colluded with HD Hyundai Oilbank on pricing, were excluded from the indictment under the leniency program for whistleblowers.
GS Caltex and S-Oil were also excluded from the indictment.
HD Hyundai Oilbank is accused of colluding with the pricing department of SK Energy to exchange price information starting in July 2024 and agreeing to raise prices simultaneously once the conflict broke out.
Prosecutors estimated the total scale of the collusion between HD Hyundai Oilbank and SK Energy to be 14.2 trillion won.
When accounting for the price hikes implemented by GS Caltex and S-Oil, which followed the colluded prices, prosecutors stated that the total impact of the price-fixing reached approximately 26 trillion won.
Prosecutors determined that at the time of the conflict, the four major oil refiners already held significant stockpiles of crude oil, meaning there was no reason for prices to surge. Despite this, all companies simultaneously raised their supply prices to an unprecedented level.
In the domestic market, oil refiners unilaterally announce supply prices to gas stations, which then determine retail prices for consumers based on those figures.
This structure inevitably leads to higher consumer prices whenever supply prices rise.
The investigation revealed that HD Hyundai Oilbank and SK Energy had been determining prices while sharing supply price information with each other since July 2024.
They even designated specific personnel to verify the pricing information of the other company.
The head of the pricing department at HD Hyundai Oilbank, who was arrested on June 18, was found to have previously worked as a price information manager at SK Energy before being appointed to his current role in August of last year, where he led the agreement to spike prices immediately after the conflict.
Prosecutors concluded that because the domestic oil market operates in a way where GS Caltex and S-Oil follow the pricing set by HD Hyundai Oilbank and SK Energy, the collusion between the latter two triggered a price surge across the entire oil market.
Prosecutors explained that while the price-following behavior of GS Caltex and S-Oil constitutes typical conscious parallelism that disrupts fair competition, it does not fall under criminal punishment under the Fair Trade Act, and thus they were excluded from the indictment.
It is reported that no clear evidence was secured showing that GS Caltex and S-Oil directly negotiated prices with their competitors.
However, prosecutors emphasized that while it is difficult to view this as criminal collusion, the economic effect is effectively the same.
In chat logs from the pricing departments secured by prosecutors, messages such as, "Raising prices by 100 won today. We might earn 2 trillion won this year," and "As expected, a company that thrives on war. Long live Trump," were exchanged.
In addition to this, prosecutors indicted all four oil refiners following an investigation into the practices of exclusive purchase contracts and retroactive settlement systems, which were identified as causes for the rising oil prices.
When the four major refiners signed supply contracts with small, independent gas stations under an exclusive purchase agreement, the stations were required to purchase all products at prices unilaterally notified by the refiners.
Prosecutors determined that the refiners penalized independent gas stations to prevent them from comparing prices and sourcing petroleum products from cheaper suppliers.
The contracts also included provisions stating that if a gas station violated the exclusive purchase agreement, the refiner would revoke benefits such as bonus card services and file massive lawsuits for damages, amounting to 10 to 30 percent of the station's annual revenue.
Refiner employees exchanged internal emails and messages stating, "For malicious clients that we decide we cannot let go easily, we should make them suffer through lawsuits," and "Since it is an exclusive contract, the moment they leave (to another supplier), they will be ruined by damages."
Prosecutors concluded that due to these practices, the refiners secured petroleum distribution channels without competition from other companies, while independent gas stations were completely blocked from the opportunity to trade with cheaper suppliers.
Employees who attempted to destroy evidence during the investigation were also indicted.
Prosecutors found that employees at HD Hyundai Oilbank and GS Caltex had identified the schedule for the Korea Fair Trade Commission's on-site inspections in advance and engaged in organized evidence destruction, such as deleting electronic data and messenger conversations.
They were found to have ordered the deletion of all electronic data containing competitor price information and company messenger conversations related to pricing.
Chief Prosecutor Na noted that a significant amount of evidence had disappeared, stating, "I believe we could have indicted them (for price-fixing) as well if not for this destruction of evidence."
Prosecutors also uncovered circumstances in which three oil refiners reported false, lower daily gasoline sales prices to the Ministry of Trade, Industry and Energy.
Prosecutors secured phone recordings in which employees explicitly discussed plans to submit false daily sales prices to the Ministry.
Prosecutors plan to share relevant materials and cooperate with the Ministry of Trade, Industry and Energy in the future.
Prosecutors stated, "We will do our utmost to maintain the prosecution so that the defendants who disrupted oil prices by using collusion and their dominant market position receive sentences commensurate with their crimes."
Meanwhile, regarding the decision to indict only up to the department head level rather than high-ranking executives, Chief Prosecutor Na explained, "We believe it is possible that those above them were aware, but unfortunately, we could not secure the evidence, so we could not indict them for that part. We seized and examined their mobile phones, but could not confirm any related content."
He added, "In terms of the scale of collusion, this can be considered the largest single case. The President ordered a stern response during a national crisis, and I believe the reality of the oil price manipulation crisis has been uncovered by the prosecution."
(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.