South Korea slams logistics firms in HHI case

Busan: Night wide angle panorama of cargo vessel in the port of Busan, South Korea, the fifth largest container terminal harbor in the world.

Six major logistics companies have been fined a total of $5.8 million by South Korea’s Fair Trade Commission (FTC) for colluding to fix prices, according to reports.

CJ Logistics, Korea Logistics, Sebang, KCTC, Global and Dongbang were all accused of fixing proces between 2005 and 2018 in their delivery contracts for Hyundai Heavy Industries (HHI), the country’s biggest shipbuilder.

The case dates back to when HHI changed the way it chose logistics firms for the delivery of heavy products, including ship deck houses and ship engines casings used for ship assembly.

This was supposed to result in a more open bidding process but the FTC has found that the companies colluded to allocate work volume in advance and designated winning bidders and fixing prices.

Moreover, they also worked on three integrated bids from 2015 and 2018 to reject proposed bids in order to prevent their own target price from falling.

Dongbang was given the heaviest fine at $2.34 million, followed by Sebang at $1.6 million.

It is the latest chapter in the recent story of South Korea’s shipbuilding industry, which has struggled under severe global, macroeconomic trends, such as overcapacity.

In November 2018 Japan officially complained to the World Trade Organisation (WTO) over alleged breaches of state-aid regulation.

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