Korea Fines 7 Biofuel Firms Up to 1.9 Trillion Won for Bid Rigging

by Kim Nam-myung (Seoul Economic Daily) Predetermined Winning Bidders for 11 Years; Possible Diesel and Energy Price Increases; FTC Recommends Criminal Referral of Firms and Executives

Domestic biofuel companies that engaged in bid rigging worth 9.7 trillion won for more than 11 years have been brought before the Fair Trade Commission (FTC). The maximum penalty the FTC has warned of reaches 1.9 trillion won.

The FTC said on the 30th that it had submitted an examination report to the commission on seven biofuel manufacturers and distributors — DS Dansuk, Aekyung Chemical, SK EcoPrime, SK Chemicals, Emax Solution, JC Chemical, and KG Eco Solution — and had launched deliberation proceedings. The examination report is a document containing the investigation findings and recommended sanctions, with the final decision to be made through a plenary session review.

The FTC examiner concluded that these companies engaged in bid rigging in tenders for biodiesel and bio-heavy oil, which are renewable energy sources, by predetermining winning bidders and having the remaining companies serve as cover bidders over a period of about 11 years and three months from December 2013 to February last year. The examiner also concluded that supply volumes were allocated in advance. The companies were found to have colluded not only in purchase tenders by oil refiners but also in tenders issued by Korea Southern Power and Korea Midland Power.

The scale of tenders affected by the collusion totaled 9.7 trillion won. Biodiesel accounted for 7.76 trillion won and bio-heavy oil for 1.95 trillion won. The market influence of the collusion was also significant. According to the FTC, the market share of the companies participating in the collusion reached about 80% for biodiesel and about 100% for bio-heavy oil. For bio-heavy oil, however, the share has now declined somewhat as some new operators have entered the market.

The FTC believes the collusion may have had some effect on consumer prices as well. It explained that since diesel currently must be blended with 4% biodiesel, an effect on diesel prices cannot be ruled out, and since bio-heavy oil is also used as a power generation fuel by some power companies, there is a possibility it affected energy prices.

The FTC examiner judged the conduct to be a "serious violation" constituting bid rigging and volume collusion under the Fair Trade Act, and recommended a cease-and-desist order, the imposition of penalties, and the criminal referral of the corporations and their former and current executives and employees. The maximum expected penalty is 1.942 trillion won, or 20% of the related sales of 9.7 trillion won.

However, the FTC explained that the related sales could be calculated at more than 9.7 trillion won, and accordingly the maximum penalty could also be larger. Oh Haeng-rok, director general of the Cartel Investigation Bureau, said, "The related sales are calculated at a larger figure than the tender scale because the handling of cover-bidding companies and other factors are reflected," adding, "The specific imposition rate will be decided at the plenary session."

The respondents may exercise their right to defense, such as submitting written opinions, for eight weeks after receiving the examination report. The FTC plans to hold a plenary session as soon as the relevant procedures are completed to finalize the determination of illegality and the level of sanctions. READ MORE

Excerpt from Asia Business Daily: An oligopolistic cartel that engaged in collusive bidding worth trillions of won for over 11 years in the "biofuel" market—an essential component for automotive diesel and power generation fuels under the government's eco-friendly energy policies (RFS·RPS)—has been uncovered by the Korea Fair Trade Commission (KFTC).

The KFTC's Cartel Investigation Bureau announced on the 30th that it has sent a review report containing the examiner's assessment to seven biofuel manufacturers and distributors who systematically acted as cover bidders and shared supply volumes during biofuel procurement bids.

The KFTC's investigation found that from December 2013 to February 2025—for a staggering 11 years and 3 months—these companies led collusive bidding by pre-selecting the winning bidder and having the others act as cover bidders in government tenders for biofuel purchases issued by refiners and power generation firms.

Currently, in accordance with the Renewable Fuel Standard (RFS), refiners (such as SK Energy, GS Caltex, S-OIL, and HD Hyundai Oilbank) are required to blend a certain percentage of biodiesel (4.0% as of 2026) into diesel fuel supplied to gas stations. Likewise, under the Renewable Portfolio Standard (RPS), major power generators like Korea South-East Power and Korea Midland Power must procure large volumes of bio-heavy oil to meet a designated portion of their total power generation (15.0% as of 2026). The scheme took advantage of the fact that refiners and power companies are obliged by law to make these large-scale, regular purchases. READ MORE