The Supreme Court ruled that the Fair Trade Commission's sanctions against domestic and foreign shipping companies for collusion on transportation fees in 2022 were legal. Previously, the Seoul High Court issued a decision canceling the sanctions, stating that "the Minister of Ministry of Oceans and Fisheries should regulate the shipping companies' fare collusion," but the Supreme Court overturned this.
This case involved a clash between the ministries as the Fair Trade Commission's actions were criticized by the Ministry of Oceans and Fisheries, which held a press conference stating that "the sanctions were unreasonable and made without understanding industry practices." After deliberation, the Supreme Court sided with the Fair Trade Commission.
According to the legal community on the 18th, the third division of the Supreme Court (Chief Justice Eom Sang-pil) sent the case back to the Seoul High Court, ruling against shipping company A in the lawsuit seeking cancellation of the corrective order filed against the Fair Trade Commission.
In 2022, the Fair Trade Commission imposed corrective orders and a total penalty surcharge of 96.2 billion won on 23 domestic and foreign container shipping companies operating routes between South Korea and Southeast Asia, including HMM, Pan Ocean, Korea Marine Transport, and Sinokor Merchant Marine. The plaintiff A was subjected to a penalty surcharge of 3.3 billion won. The Fair Trade Commission determined that these companies colluded on container shipping freight rates 120 times on the Korea-Southeast Asia export-import routes from 2003 to 2018.
In response, the shipping companies protested, stating, "We engaged in joint actions allowed by the Shipping Act." According to the Shipping Act, joint actions that are reported to the Minister and agreed upon with shipper organizations are not considered collusion. The shipping companies claimed they reported to the Ministry 18 times, arguing that the report contained the details of the 120 freight rate agreements in question this time.
However, the Fair Trade Commission did not accept the shipping companies' claims. The Fair Trade Commission stated, "They reported fare increases 18 times, but the actual joint actions were carried out about 120 times, differing in both content and timing from the reports."
The Ministry also publicly opposed the Fair Trade Commission's sanctions policy. It was reported that the then-director of the Ministry's Shipping and Logistics Bureau attended a plenary meeting held before the Fair Trade Commission's decision and argued that "fare collusion is an industry practice." After the Fair Trade Commission's sanctions, the Ministry actively held a press conference, stating that "the Fair Trade Commission imposes unreasonable sanctions without understanding the nature of the shipping industry," and issued a press release.
The shipping companies each filed administrative lawsuits requesting cancellation of the Fair Trade Commission's sanctions. Last February, the Seoul High Court ruled in favor of A, ordering the cancellation of the Fair Trade Commission's penalty surcharge. This represented the first ruling in lawsuits related to the shipping fare collusion sanctions, resulting in a defeat for the Fair Trade Commission. The court stated, "According to the Shipping Act, only the Minister has exclusive regulatory authority over joint actions regarding freight rates for foreign shipping companies," adding, "The Fair Trade Commission does not have the authority to regulate this."
However, the Supreme Court overturned the second-instance ruling, indicating that the Fair Trade Commission has the authority to sanction shipping companies for fare collusion. The court noted, "Considering the legislative intent of the Fair Trade Act, this law is aimed at implementing the socially required market economy system as mandated by the Constitution across the national economy." It further stated, "Unless specified otherwise by other laws, it should apply to all sectors of industry."
The Supreme Court continued, "The Shipping Act does not contain an explicit provision excluding the application of the Fair Trade Act to price collusion actions," stating that it cannot be recognized that the Shipping Act is exclusively applicable to the price collusion in this case. Just because the Shipping Act acknowledges the Minister's authority over price collusion actions does not mean that the Fair Trade Act cannot be applied at all.
Meanwhile, this Supreme Court ruling is expected to impact the lawsuits of 22 other shipping companies that were also subjected to penalties alongside A. The other lawsuits have not yet received a second-instance ruling. Attorney Lee Ho-young of the law firm Ji-eum, which represents the Fair Trade Commission, stated, "Other judgments are expected to be made in accordance with the ruling of the Supreme Court."