The nation's antitrust regulator is waging a war on rampant price rigging by consumer product manufacturers, fuel suppliers and construction firms. But the country still has a long way to go before firmly establishing competition rules and better protecting consumer rights. Needless to say, price fixing and other unfair business practices undermine the very foundation of capitalism and the market economy.
More worrisome is that a large number of local corporations have little sense of compunction about playing a dirty game only to maximize their profits at the sacrifice of their competitors or consumers. Critics point out that unfair practices are so widespread that almost all companies are directly or indirectly engaged in price cartels, bid riggings and other forms of anti-competition activity.
On Thursday, the Fair Trade Commission (FTC) decided to impose a combined fine of 668.9 billion won ($580 million) on six major liquefied petroleum gas (LPG) suppliers for fixing prices for their products. Those subject to the penalty are E1 Corp., SK Gas, SK Energy, GS Caltex, Hyundai Oilbank and S-Oil Corp., most of which are affiliated with the nation's family-controlled conglomerates, or chaebol.
In July, the FTC slapped a 260-billion-won fine on Qualcomm of the U.S. for abusing its dominant position in the Korean market for code division multiple access (CDMA) mobile phone chips. On Nov. 3, the commission ordered four beverage suppliers ― Lotte Chilsung, Coca-Cola Korea, Haitai and Dongah Otsuka ― to pay a combined total of 940 million won for blocking discount stores from lowering the retail prices of their products below fixed levels. On Nov. 18, it also imposed a 226.3 billion won fine on 11 manufacturers of soju, the nation's popular liquor, including Jinro, Doosan, Daesun and Kumbokju.
Announcing the latest punitive action, the FTC said the LPG suppliers have been fixing their product prices for six years from 2003. It also accused them of increasing the prices in unfair ways, thereby leading to a hike in heating and transportation costs for consumers. In other words, the suppliers have pocketed undue and illegitimate profits by selling LPG at much higher prices than what they ought to have been.
We believe the FTC has taken the right action against the companies, although it is belated. The FTC said it has found out that the suppliers raised LPG prices almost simultaneously and by the same margins in many cases. Some industry sources estimated that the firms have pocketed roughly several trillion won through the price collusion over the last six years. If so, it seems that the fine is only a slap on the wrist, considering the astronomical amount of ill-gotten gains.
Now, we have to ask a question: How could the LGP suppliers have rigged prices for such a long period? What has the regulator done to discover and crack down on such an unfair and illegal practice? We have no choice but to jump to the conclusion that the FTC has been negligent in ensuring fair competition. We urge the regulator to reflect on its past inaction and negligence. And it should put action before words to become a true guardian of the rules of competition.