By Kim Hyun-cheol
Staff Reporter

Local oil companies are in trouble over a new policy starting today, which will demolish exclusive ties between them and gas stations.

Gas pumps will be allowed to sell oil products from all companies with the abrogation of what was called the ''pole sign policy.'' A mixture of products from various companies will be also available as long as sellers inform consumers.

Under the previous policy, gas stations could only deal with the brand they displayed, with violation subject to legal punishment.

Predictions, however, differ in the industry on effects of the measure.

Authorities expect the action will foster fair competition among refineries by removing them from a position of dominance in the business, thus ultimately curbing the overall price of petroleum products.

The regulation, introduced in 1992 to protect consumers' right of choice and encourage competition among refineries, has failed to play its proper role and rather stirred up unfair deals between oil firms and gas pumps, the Fair Trade Commission (FTC) said when announcing its plan in June.

"Mixed sales will be gradually introduced in gas stations, as soon as their exclusive deals with refineries expire," the anti-trust body said.

The Korea Oil Station Association (KOSA) is sharing the same view with the FTC, predicting most stations will kick off selling various brands together. Prices can dip 40 to 50 won ($0.04-0.05) per liter through multiple sales, the organization of local gas stations expects.

''It is usually station owners who face complaints from customers, and the currently turbulent prices are mostly attributable to the fact refineries' price policies are not transparent," KOSA said.

Refineries are negative on the price-curbing effect, but still bent on coming up with solutions to minimize damage.

"I don't think this will lead to significant price cuts. The average margin of refineries is never higher than many other businesses and competition is already intense enough," said a spokesperson of a major oil firm, who declined to be identified. "Anyhow, some countermeasures are in view under this new circumstance."

Woes still linger about possible controversies in the market. Customers using mileage and discounts services affiliated with refineries, for example, could see these perks end as oil companies are purportedly reviewing the current system.

"The government will have to watch carefully how much the expected effect writes off consumer benefits under the current system, as well as make efforts to minimize their confusion," the spokesperson said.

hckim@koreatimes.co.kr