Prosecutors are in the midst of investigations targeting so-called price-fixing crimes by companies. Following sugar and starch sugar, the scope is expanding to oil refining collusion. While the moves aim to deliver a blow to acts that disrupt the public economy through price and other forms of collusion, there is no shortage of anxious views ahead of the launch of a new criminal justice system in October. Although the abolition of the prosecution service means that investigative authority will shift to bodies such as the Serious Crimes Investigation Agency and the police, no legal or institutional reforms have been made at all.
According to the legal community on the 12th, the Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (led by Chief Prosecutor Na Hee-seok) sent the corporate entities of HD Hyundai Oilbank, SK Energy, GS Caltex, and S-Oil to trial on the 6th, along with four individuals including three HD Hyundai Oilbank executives and employees and one GS Caltex executive, on charges of violating the Fair Trade Act. A, the head of HD Hyundai Oilbank's pricing department, was indicted under detention.
HD Hyundai Oilbank is accused of exchanging price information with SK Energy's pricing department from July 2024 and colluding to raise prices simultaneously when war broke out. The total scale of collusion identified by prosecutors alone amounts to 14.2 trillion won. Taking into account that GS Caltex and S-Oil raised prices with reference to their collusion prices, prosecutors judge that the collusion effect reaches a total of approximately 26 trillion won. However, GS Caltex and S-Oil were excluded from indictment as prosecutors failed to secure clear evidence that they directly negotiated prices with competitors. SK Energy and the employee in charge were reportedly not included among those indicted under the self-reporting leniency program (leniency). Instead, the four oil refiners were charged with providing disadvantages (violation of the Fair Trade Act), such as unilaterally notifying supply prices to gas stations that had signed full-purchase contracts, claiming large damages when they received products from other companies, and suspending bonus cards.
The background to SK Energy's escape from the risk of being sent to trial on oil price-fixing charges is understood to lie in leniency. This is based on the "Guidelines on Penalty Reduction and Investigation Procedures for Cartel Cases," a Supreme Prosecutors' Office regulation implemented in 2020.
According to the regulation, a "penalty reduction application" refers to an expression of intent to seek exemption from or reduction of punishment by voluntarily reporting facts about a cartel to prosecutors. The method involves applying to the Anti-Corruption Department of the Supreme Prosecutors' Office with evidence attached. The requirements for penalty reduction include △submitting evidence first and alone △when prosecutors have not secured evidence △faithful cooperation with the investigation and trial △ceasing the cartel. There are no restrictions on the form or type of submitted evidence, including documents, recording tapes, and computer files. Accordingly, if selected as the first-ranked applicant, one is excluded from the scope of indictment. In the case of the second-ranked applicant, the punishment is reduced by 50 percent. "Who" applied for leniency is also kept 100 percent confidential. This is because the regulation stipulates that "the prosecution service and its affiliated officials must not provide or leak the identity, contents of tips, and other information to outside parties, except when the penalty reduction applicant consents."
A legal community official familiar with prosecution matters explained, "Prosecutors do not clearly express the leniency targets even when announcing investigations," adding, "This is interpreted as a measure in accordance with the Guidelines on Penalty Reduction and Investigation Procedures for Cartel Cases." He continued, "As leniency enters its sixth year of implementation, competition for first place is fierce, to the point where application forms are received at intervals of a few minutes," adding, "As it is directly linked to judicial risks such as indictment, in some cases circumstances are even detected where parties try to 'collude' even over leniency."
The problem is that the body deciding on leniency in collusion cases remains the prosecutor. According to the regulation, penalty reduction applications are received by the Anti-Corruption Department of the Supreme Prosecutors' Office. In addition, the investigating prosecutor consults with the Anti-Corruption Department of the Supreme Prosecutors' Office on penalty reduction decisions. Although the launch of a new criminal justice system centered on the separation of investigation and prosecution, including the abolition of the prosecution service, has entered its final countdown, legal and institutional changes and supplementation are still nowhere in sight, and there is no shortage of concerned voices that confusion could only grow.
Another legal community official pointed out, "Leniency is a part related to both investigation and prosecution," noting, "Going forward, the Serious Crimes Investigation Agency should handle investigation and the Public Prosecution Agency should handle prosecution, but it has not even been decided which side will handle applications for leniency, let alone the judgments."
