Seven biofuel firms face fines up to W2tr over 11-year bid-rigging scheme

Seven companies that allegedly colluded for more than 11 years in government tenders for biodiesel and bio-heavy oil — both renewable fuels — are set to face proceedings before the Korea Fair Trade Commission. The affected tenders totaled about 10 trillion won ($6.9 billion), and fines of up to 2 trillion won are considered possible.

The Fair Trade Commission said Thursday it had completed an investigative report on the biofuel bid-rigging case, submitted it to the commission and sent copies to the seven manufacturing and sales companies under investigation.

The companies that received the investigative report are DS Dansuk, Aekyung Chemical, SK Ecoprime, SK Chemicals, Imax Solution, JC Chemical and KG Eco Solution.

The investigative report sets out the violations identified during the probe and the investigator's recommended sanctions; it does not constitute the commission's final ruling. The case will proceed to deliberation by either the full commission or a subcommittee before a final decision on sanctions is reached.

The commission's investigator found that the companies colluded in biofuel tenders from December 2013 through February 2025, pre-determining which company would win each contract while the others participated as sham bidders and dividing up contract volumes among themselves.

Biodiesel is a renewable fuel that refiners are required by law to blend into automotive diesel at a set ratio; SK Energy, S-Oil, HD Hyundai Oilbank and GS Caltex purchase it through annual tenders. Bio-heavy oil is procured through periodic tenders by power generators such as Korea Southern Power and Korea Midland Power under the Renewable Portfolio Standard regime.

The investigator estimated that the tenders affected by the collusion totaled 7.76 trillion won for biodiesel and 1.95 trillion won for bio-heavy oil, for a combined 9.7 trillion won.

The seven firms held about 80 percent of the biodiesel tender market and in effect dominated the bio-heavy oil market. The commission believes the collusion may have affected diesel prices and broader energy costs as well.

The investigator classified the conduct as an "extremely serious violation" under the Fair Trade Act and recommended that the commission issue corrective orders and levy fines, as well as refer the companies and their current and former executives to prosecutors for criminal charges.

Under current rules, fines for bid-rigging can reach up to 20 percent of the relevant tender value, putting the maximum at 1.94 trillion won. However, observers note the actual amount could exceed that figure if the value of sham bids is also factored into the calculation.

A Fair Trade Commission official said the companies that received the investigative report may submit written responses within eight weeks of the delivery date, after which the commission chairman will set a schedule for a full commission hearing.