Is This Why Fuel Prices Were So High?...9.7 Trillion Won Biofuel Cartel Faces KFTC Judgment

KFTC Sends Review Report to Seven Firms for Bid Rigging
Fines Could Approach 2 Trillion Won

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 commission began full deliberation procedures at the plenary session. The companies subject to regulation are DS Dansuk, Aekyung Chemical, SK Ecoprime, SK Chemicals, Emac Solution, JC Chemical, and KG Eco Solution—seven leading domestic biofuel companies.

9.7 Trillion Won Swept Up Over 11 Years and 3 Months... 100% Market Share in Bio-Heavy Oil

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. The total size of the bids involved in the collusion reached over 9.7 trillion won, consisting of 7.76 trillion won for biodiesel and 1.95 trillion won for bio-heavy oil.

The reason they were able to dominate the market for such a prolonged period was their substantial market power. According to the KFTC, during the collusion period, the seven companies accounted for 80% of the biodiesel market share, and in the bio-heavy oil market, they virtually monopolized 100% of the market for most of the period.

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.

Fines Could Approach 2 Trillion Won...Cascade Impact on Diesel Prices at Gas Stations

The KFTC examiner determined that these actions constitute a "very serious violation" of Article 40, Clause 1, Item 8 (bid rigging) and Item 3 (volume allocation cartel) of the Monopoly Regulation and Fair Trade Act. Accordingly, the review report includes recommendations for corrective orders, imposition of fines, and referral of both corporate entities and current or former executives involved to the prosecution.

The potential scale of the fines is notable. In the case of bid rigging, fines can be imposed up to 20% of the relevant sales (the bid size). Moreover, when aggregating the sales values related to subsidiary cover bids, the total relevant sales considered for calculation far exceed 9.7 trillion won. If the statutory maximum fine is applied, the total fine could approach around 2 trillion won.

Additionally, this collusion has had a direct impact on the wallets of ordinary citizens. Oh Haengrok, Director General of the KFTC's Cartel Investigation Bureau, explained, "Given that 4% biodiesel blending is mandatory in diesel, higher biodiesel bid prices have also affected consumers' fuel prices at the pump to a certain extent."

The companies subject to regulation may submit written opinions and exercise their right to defense within eight weeks of receiving the review report. Once the procedure to guarantee their defense rights is complete, the KFTC plans to convene a plenary session as early as the second half of this year to finalize the amount of fines and the degree of sanctions.

This content was produced with the assistance of AI translation services.