Amid volatile international oil prices driven by the Russia-Ukraine war and the US-Iran conflict, allegations have surfaced that two major oil refiners shared price information on gasoline, diesel, and kerosene and colluded on sales prices, bringing them under the scrutiny of the Fair Trade Commission (FTC).

The FTC's secretariat announced today (Oct. 7) that it has submitted an examination report containing the legal violations and sanction recommendations compiled by investigators regarding the alleged gasoline, diesel, and kerosene collusion by SK Energy Co. and HD Hyundai Oilbank Co. to the commission and sent it to the respondents.

An examination report is a document outlining the legal violations identified by investigators during the investigation. Its delivery and submission to the commission marks the formal commencement of the deliberation process.

Investigators suspect that the two refiners exchanged information regarding deposit prices, finalized prices, and sales policies concerning gasoline, diesel, and kerosene for about four years, from February 2022, just before the Russia-Ukraine war, to March of this year, shortly after the US-Iran conflict.

In addition, they believe there are suspicions that the companies explicitly conspired twice on sales prices (deposit prices) following the US-Iran war.

Refiners and their business partners, such as gas stations, trade under a customary practice known as the ex-post settlement system.

Specifically, each gas station is supplied with petroleum products based on deposit prices initially set by the refiner.

At the beginning of the following month, the refiner determines the final price to be applied retroactively to the previous month's transactions, and the petroleum product transaction is concluded by settling the difference between the deposit price and the finalized price.

This structure means that the sales prices of gas stations and consumer purchase prices are sequentially determined by the deposit and finalized prices set by the refiners.

Separately, refiners influence consumer purchase prices by implementing sales policies, such as discounting sales prices for a specific period or guaranteeing the same price for a certain duration.

The domestic manufacturing and sales market for gasoline, diesel, and kerosene operates in a structure where refiners import and refine crude oil to supply products directly or through gas stations and wholesalers.

As of last year, the oligopolistic market is dominated by four companies accounting for approximately 98%: SK Energy at 28.1%, HD Hyundai Oilbank at 21.0%, GS Caltex at 23.3%, and S-OIL at 25.5%.

The combined market share of SK Energy and HD Hyundai Oilbank reaches 49.1%.

However, collusion involvement has not been confirmed for GS Caltex and S-OIL.

Oh Haeng-rok, Director General for the FTC's Cartel Investigation Bureau, explained, "We view that the sharp fluctuations in international oil prices amid war conditions served as a catalyst for initiating information exchange. Although it is an oligopolistic system, the combined market share of the two companies is around 50%, which we believe is sufficient to impact market competition order."

Investigators estimated that the affected sales volume related to the alleged collusion amounts to approximately 44.1 trillion won.

This translates to an average of about 30 billion won per day.

Investigators concluded that the actions of the two refiners constitute "serious violations" of the Fair Trade Act regarding "price fixing" and "information exchange," and recommended corrective orders and the imposition of fines.

Prior to the FTC, the prosecution also investigated SK Energy and HD Hyundai Oilbank for price collusion and indicted them.

The prosecution's investigation results raised suspicions that executives and employees of the two refiners preemptively learned of the FTC's on-site inspection schedule and engaged in systematic evidence destruction, such as deleting computer data and messenger chats.

Regarding this, Director General Oh explained, "I understand that the FTC's Audit Officer's Office is conducting an investigation into whether the management of investigative information was inadequate," adding, "I understand that information was not leaked from within the FTC."

The two refiners are guaranteed rights of defense, including submitting written opinions and applying for the review and copying of evidence materials, within eight weeks from the date of receiving the examination report.

The FTC plans to hold a full commission meeting to reach a final judgment as quickly as possible once the procedures for guaranteeing the right of defense are concluded.

SK Energy and HD Hyundai Oilbank stated that they will actively clarify the facts and the company's position regarding the collusion allegations during the upcoming FTC deliberation process.

An official from SK Energy said, "We are closely reviewing the contents of the FTC's examination report," and added, "We will faithfully participate in future deliberation procedures, including the plenary meeting, to thoroughly clarify the facts and the company's position."

An official from HD Hyundai Oilbank remarked, "The company takes the submission of the examination report gravely," while emphasizing, "However, as this is merely the beginning stage of the deliberation process, we will faithfully clarify the facts and legal issues during the future deliberation proceedings."

In particular, the company emphasized, "All information exchanged was already public in the market or verifiable through various channels, and did not have any impact on the company's decisions regarding prices and sales policies," adding, "Regarding the FTC's judgment that deposit prices were colluded on after the US-Iran war, it is based solely on the one-sided statement of a competitor's representative, and there was absolutely no collusion."

(Photo: Yonhap News)