Move prompted by Lee’s comments on oil prices


The antitrust regulator is investigating four major oil refiners for possible price rigging and cartel activities, sources said Thursday.

The probe comes amid growing government pressure on them over surging fuel prices.

The Fair Trade Commission this week conducted on-site investigations of GS Caltex, S-Oil, Hyundai Oil Bank and SK Energy to see if there were any under-the-table agreements promising lower petroleum prices to gas stations. The focus is also on finding evidence of possible anti-competitive practices including blocking of gas station permits in areas where one company dominates.

The oil industry has been refuting the allegations made, saying the recent price increase was solely due to soaring import prices.

An insider in the industry said the case is related to the blame game the four are engaged in, sparked by the record amount of penalty the regulator imposed on LPG price fixing in December 2009.

A 668 billion won ($601 million) fine was imposed on six LPG sellers, which SK Gas and SK Energy received exemption for turning itself in.

“A company among the rest of the five may have reported a similar business practice to avoid a penalty this time, we may be able to tell in time,” an insider said.

“Someone reported a price-fixing case in the industry to the FTC last year, but it wasn’t investigated much then. President Lee Myung-bak’s recent comment sparked the probe.”

President Lee Myung-bak on Nov. 13 said that oil prices need to be “carefully analyzed” to determine whether they are at “reasonable levels.”

Following Lee’s comment, the FTC and the Finance Ministry moved to rein in petroleum prices.

“Gasoline and other petroleum products are the barometer for consumer prices that is directly linked to the lives of people,” Vice Finance Minister Yim Jong-ryong said at a policy meeting of government officials in Gwacheon on Friday.

He however ruled out lowering tax to curb oil prices, saying that measures such as promoting competition within the industry and the price structure of petroleum products will be reviewed.

Oil-related taxes make up 50 percent of the price structure. Refineries take six percent and the cost of crude oil is known to be around 44 percent, according to the Ministry of Knowledge Economy.

According to the Korea National Oil Corp., gasoline price increased from 1767.55 won per liter from the third week of December to 1822.70 won by the second week of January, rising 3.1 percent in just five weeks.

Its report showed that GS Caltex offered gasoline at the highest price to gas stations, while S-Oil offered it at the lowest price. The gap between the two was 37.7 won per liter, it said.

By Cynthia J. Kim (cynthiak@heraldcorp.com)