CJ, Hanjin punished for colluding over rice shipping
CJ Logistics, Hanjin Transportation and four other logistics firms were slapped with a combined 12.74 billion won ($10.65 million) in fines for colluding in the bidding to ship brown rice for municipal governments, the Fair Trade Commission (FTC) said Wednesday.
Those logistics firms were found to have been colluding for 18 years in 127 biddings, in order to prevent the transportation fee from being discounted through bidding processes. It is the longest-running case the antitrust agency has clamped down on so far.
According to the FTC, it found CJ Logistics, Hanjin Transportation, Dongbang, Dongbu Express, Sebang, Intergis and Dongbu Corp. have been colluding in biddings for municipal governments’ rice shipping service from 2000 to 2018. Of those firms, Dongbu Corp. was exempted from fines due to laws prohibiting fines on firms in corporate workout.
Along with the fine, the FTC said it will hand over four of the firms — Hanjin Trasportation, Dongbang, Dongbu Express and Sebang — to the prosecution.
Of the companies fined, CJ Logistics was levied the heftiest at 3 billion won, followed by Sebang with 2.82 billion, Dongbang with 2.48 billion won and Hanjin with 2.42 billion won.
According to the FTC, the central government has been importing brown rice and distributing it to storage facilities across the country. To transport the rice, city and provincial governments hired CJ Logistics from 1995 to 1998, but have been receiving bids from other logistics firms since 1999.
To prevent transportation fees from being discounted through the bidding process, however, the seven companies have been holding meetings annually to decide which company would take the projects for a certain year.
When a company was selected, others bid higher prices on purpose, so that they could prevent the price from dropping.
After winning the bid, the selected company contracted out the transportation project to CJ Logistics again after taking approximately a 10 percent margin to save on costs, the FTC said. CJ Logistics is the exclusive contractor unloading brown rice imported by the central government.
“This is the longest period of collusion the antitrust agency has clamped down on so far and bears significance because brown rice is an ingredient for a wide range of foods we eat every day,” an FTC official said. “The FTC believes this will set a precedent for companies to avoid colluding in civil projects.”