Gavin Magrath, Magrath’s International Legal Counsel, Toronto, Canada

On Tuesday, January 18th, the Korea Fair Trade Commission hit numerous shipping companies with a total of USD$81 million in fines for price fixing on multiple routes between Korea and other east Asian trading centers over a 15-year period.

The ruling affects 23 Korean and international shipping lines, including:

  • Cosco
  • Evergreen
  • Hyundai Merchant Marine
  • Heung-A
  • Korea Marine Transport Co
  • New Golden Sea Shipping
  • OOCL
  • SM Line
  • Wan Hai

According to KFTC chair Joh Sung-Wook commented:

“We understand the shipping industry’s unique position and its significance, but there’s no change in our role to enforce laws on anti-competitive actions…. We expect the penalty to spread fair competition culture in the shipping sector as well as pave the way for its sustainable development.”

In many countries the shipping lines enjoy legal protection from the normal competition regime; in Canada, for example, lines are exempted from the Competition Act if inter-line agreements are filed pursuant to the Shipping Conference Exemption Act 1987.

These exemptions are being tested in the crucible of supply chain disruptions and bottlenecks caused by the COVID-19 Pandemic. Transport Canada is currently seeking industry input on shipping competitiveness and anti-competitive practices, while in America the Justice Department and the FMC are stepping up investigation and enforcement actions pursuant to the recent FMC rulemaking on carrier billing practices.

Freight forwarders and their customers can take heart in making slow progress on this long-standing issue; certainly there is reason to be optimistic that these investigation and enforcement measures will flow through the supply chain to the benefit of the global industry even in the absence of domestic policy measures.