Supreme Court Rules on Shipping Rate Collusion Case

The Supreme Court of South Korea has ruled that the Korea Fair Trade Commission (KFTC) was justified in imposing fines on domestic and international shipping companies for colluding on freight rates between Korea and Southeast Asia. This decision overturns a previous ruling that stated the Ministry of Oceans and Fisheries had jurisdiction over shipping rates, thus excluding KFTC's involvement.

On May 18, the Supreme Court's third division, led by Justice Eom Sang-pil, reversed a lower court's ruling that favored the shipping companies in a lawsuit against the KFTC. The case stemmed from a 2022 KFTC order that penalized 23 shipping firms, including Korea's 고려해운 (Korea Line), 에버그린 (Evergreen), and HMM, with a total fine of 96.2 billion won for colluding on freight rates over a span of 15 years, from 2003 to 2018.

The shipping companies argued that their actions were legitimate under the Shipping Act, which allows for joint actions among shipping firms regarding freight conditions. They claimed that the KFTC's sanctions were unwarranted, and the Ministry of Oceans and Fisheries had previously supported this view, stating that such joint actions benefit customers.

However, the Supreme Court emphasized that the Fair Trade Act is designed to uphold a socially responsible market economy across all sectors unless explicitly stated otherwise in other laws. The court noted that the Shipping Act does not contain any provisions that exempt joint actions from the Fair Trade Act, thus affirming the KFTC's authority to regulate collusion in freight rates.

This ruling is expected to have significant implications for ongoing cases between shipping companies and the KFTC currently being heard in the Seoul High Court.