Fears grow over China’s retaliation to Korea’s planned fines for shipping firms

Fears grow over China’s retaliation to Korea’s planned fines for shipping firms
05/04/2022 https://www.hellenicshippingnews.com/fears-grow-over-chinas-retaliation-...

China has warned of potential retaliation against the Korea Fair Trade Commission’s (FTC) attempt to fine shipping companies, including dozens of Chinese firms, for their alleged collusion to fix the freight rates for sea routes between the two countries over more than a decade.

According to industry officials, Monday, Korea’s antitrust watchdog sent its review report on March 25 to around 20 shipping companies from Korea, China and Japan to inform them of its plan to fine them for simultaneously raising freight rates for the Korea-China and Korea-Japan routes.

The measure was taken about two months after the FTC decided in January to fine 23 shipping companies, including 11 foreign firms, a combined 96.2 billion won ($79 million) for 15 years of alleged collusion to fix the freight rates for sea routes between Korea and Southeast Asia.

The watchdog plans to hold a meeting on April 27 to determine the amount of the fines for the shipping companies that sailed the Korea-China route. The penalties on the shipping companies that sailed the Korea-Japan route will be determined at its April 28 meeting.

The Ministry of Oceans and Fisheries, which supervises the shipping industry, has maintained a negative stance on the FTC’s sanctions, saying it is unreasonable and thoughtless to prohibit “collaborative actions” that are allowed by international law.

“We have continued persuading the FTC, using all possible measures,” said a government official from the maritime ministry’s shipping policy division.

The ministry has been especially worried about possible diplomatic friction with China, because the Chinese government sent letters last May and July to the Korean government, expressing its concerns over the FTC’s investigation into shipping companies that sailed the Korea-China route.

“If the FTC fines shipping companies for fixing freight rates for the Korea-China route, the shipping agreement between the two countries will become virtually invalid,” the ministry said in its press release. “We are concerned about possible protest from the Chinese government and annulment of the shipping agreement between the two countries.”

The FTC, however, has remained silent on the maritime ministry’s claim.

Shipping companies have threatened to file an administrative lawsuit against the FTC.

“We hired a law firm to discuss possible countermeasures,” a Korea Shipowners’ Association official said. “We will file a lawsuit, as soon as the FTC determines sanctions on shipping companies that sailed the Korea-China and Korea-Japan routes.”

The association has also been engaging in a petition campaign to collect 10 million signatures urging the FTC to withdraw its decision. In addition, it plans to send a letter to President-elect Yoon Suk-yeol, hoping for him to side with shipping companies, based on his business-friendly stance.

There is greater likelihood of Yoon supporting shipping companies, since the maritime ministry sent its shipping and logistics bureau head to the presidential transition committee’s second economy division in charge of industrial policies.

The incoming administration has also been urged to make efforts for the passage of revisions to the Marine Transportation Act, which will exempt collaborative actions among shipping companies from antitrust regulations.

If the National Assembly passes the revised bill, the FTC’s sanctions will be nullified.
Source: The Korea Times