South Korea's ruling party has moved to crack down on unfair trade practices, including exclusive one-to-one contracts between oil refiners and gas stations, seizing on a surge in oil prices triggered by Middle East tensions. The party plans to seek solutions through social dialogue involving the private sector and the government, but is prepared to introduce mandatory regulations if the industry fails to reach an agreement.
The Democratic Party of Korea's "Committee to Protect the Underdog" (Euljiro Committee) on Monday launched a social dialogue body at the National Assembly in Yeouido, Seoul, bringing together the government, major oil refiners — SK Energy, GS Caltex, S-Oil and HD Hyundai Oilbank — and the Korea Gas Station Association for its inaugural meeting. The gathering was organized to explore ways to stabilize fuel prices and promote mutual cooperation between refiners and gas stations amid a sharp rise in international oil prices due to the prolonged Middle East conflict.
The exclusive supply arrangement, under which each gas station sources its entire fuel supply from a single refiner, emerged as the central issue at the meeting. Oil refiners took the position that "this is a matter affecting the entire industry and should be discussed over time," while gas station operators urged that mixed contracts with multiple refiners be allowed, arguing that "the current structure makes it difficult to contract with cheaper refiners."
The Democratic Party identified the exclusive dealing practice as one of the main drivers of rising fuel prices and decided to accelerate institutional reform. The party plans to open the door for gas stations to freely purchase the remainder of their fuel by requiring refiners and stations to commit to only a minimum purchase ratio — 50 percent or 70 percent — through a standard contract overseen by the Fair Trade Commission (FTC). The party expects the reform to lower fuel prices through price competition among refiners and reduce the burden on consumers.
Rep. Jeong Jin-wook, the lead lawmaker of the Euljiro Committee, told reporters immediately after the meeting, "If oil refiners refuse to cooperate at all, we will have no choice but to force compliance by inserting penalty provisions into the law." He added, "Since this would bring a fundamental change to the way refiners do business, we first proposed resolving the issue through social dialogue."
