Key figures: Cartel duration: December 2003 to December 2018 · Companies involved: 23 (12 Korean, 11 foreign) · Meetings: 541 · Agreed freight rates: 120 · Fines: 96.2bn won ($81m) on Southeast Asia routes; 80bn won ($63m) on Japan routes · Market control: 70-93% of affected routes · Supreme Court ruling: April 2025, in favour of KFTC

In January 2022, South Korea's Fair Trade Commission announced that it had fined 23 domestic and foreign shipping companies a combined 96.2 billion won, approximately $81 million, for colluding on freight rates on sea routes between South Korea and Southeast Asia. The cartel had operated for 15 years, from December 2003 to December 2018. The companies had held 541 meetings and agreed on 120 separate freight rates.1

Five months later, the KFTC imposed additional fines of approximately 80 billion won on 15 companies for similar collusion on Korea-Japan routes, and issued corrective orders for 27 companies on Korea-China routes.2 Across the affected lanes, the fined carriers controlled between roughly 70 and 93 per cent of shipping capacity, depending on the route.

The case is now entering its final appeals phase, with individual carrier lawsuits still pending before the Seoul High Court. In April 2025, the Supreme Court issued a landmark ruling in favour of the KFTC, rejecting the carriers' argument that their conduct was protected under South Korea's Marine Transportation Act.3 That decision overturned a Seoul High Court ruling from the previous year, which had found that the maritime regulator, not the competition authority, held sole jurisdiction over shipping conduct and had briefly put the original fines at risk.4

The legal battle matters. But the cartel itself is the more instructive story. It is a remarkably detailed case study in how cartels actually work: how they form, how they enforce discipline among members who have every incentive to cheat, and why industries with the structural characteristics of container shipping are so vulnerable to collusion.

How the Cartel Worked

The arrangement began in 2003 when three Korean shipping companies formed a coordination group on the Korea-Southeast Asia trade lane. It eventually grew to include 23 firms, among them some of the world's largest carriers: HMM, Korea Marine Transport, Taiwan's Evergreen Marine, Yang Ming, Wan Hai Lines, and Maersk's regional operator Sealand.

Cartel stability: Cartels are inherently unstable because each member has an incentive to undercut the agreed price and capture market share. To survive, cartels must solve two problems: coordination (agreeing on prices) and enforcement (detecting and punishing cheaters). The Korea shipping cartel solved both.

The KFTC's investigation found that the companies agreed on the lowest permissible basic freight rates, introduced and increased various incidental charges in unison, coordinated bidding prices for large shippers, and agreed not to poach each other's cargo. To enforce compliance, the cartel conducted follow-up meetings and freight rate audits. Companies that violated the agreements were fined internally. Shippers who refused to accept the agreed rates were collectively denied service.

This is the prisoner's dilemma made operational. In a competitive market, each carrier has an incentive to undercut its rivals on price to fill capacity. The cartel solved the free-rider problem not through trust but through surveillance and punishment. The 541 meetings over 15 years were not negotiations. They were enforcement sessions.

The companies agreed 'not to rob each other of cargo' and protect existing shipping companies to maintain their existing customers.

From the KFTC's findings on the cartel's practices. The logic is universal to any cartel: the collective benefit of high prices outweighs the individual temptation to compete, provided enforcement holds.2

Why Shipping Is Vulnerable

Container shipping has structural characteristics that make it unusually susceptible to collusion. Understanding why requires looking at the industry's cost structure and market concentration.

Shipping is a high fixed-cost, low variable-cost business. The capital expenditure on a modern container vessel runs into hundreds of millions of dollars. Once a ship is deployed on a route, the marginal cost of carrying an additional container is close to zero. This creates intense pressure to fill capacity, which in a competitive market drives prices towards marginal cost, well below what carriers need to cover their fixed costs. The result is an industry prone to destructive price wars during downturns, which in turn creates a powerful incentive to coordinate.

MSC vs Maersk: share of global container fleet capacity (%), 2018 to 2026. MSC overtook Maersk in January 2022, when both held approximately 17%. Source: Alphaliner, via Global Trade Magazine, Global Maritime Hub and Container News.

The crossover tells the story. MSC has essentially doubled its global share since 2010 through aggressive secondhand acquisitions and newbuilds, surpassing Maersk's historic peak of 19.3 per cent. The top ten carriers now control roughly 85 per cent of global fleet capacity.5 Several of the industry's largest names, including Evergreen and HMM, were directly involved in the Korean cartel.

This matters because the economics of collusion predict that cartels are more likely to form and persist in markets with few players, homogeneous products, transparent pricing, high barriers to entry, and stable demand patterns. Container shipping meets every criterion. The product is a commodity (moving a box from A to B). Pricing is relatively transparent through rate filings and freight indices. Entry requires enormous capital. And demand, while cyclical, follows predictable trade patterns.

The Legal Grey Zone

What makes the Korean case particularly interesting is the carriers' defence. They did not deny coordinating on freight rates. They argued that the coordination was legal.

Article 29 of South Korea's Marine Transportation Act permits international cargo carriers to engage in joint activities regarding freight rates, vessel deployment, and cargo loading. The rationale is that the shipping industry's extreme cost structure means unrestrained price competition can lead to monopolisation by the largest firms, destroying smaller carriers and ultimately reducing service for shippers. Countries around the world, including the EU (until its block exemption expired in 2024) and the United States (through the Federal Maritime Commission's antitrust immunity provisions), have historically permitted some degree of collective rate-setting in shipping.

The KFTC drew the line between permitted cooperation and illegal collusion. The carriers were permitted to have alliances and even discuss rates, but they were required to report collective actions to the Minister for Oceans and Fisheries and give 30 days' notice of rate changes to shippers. The cartel did none of this. The meetings were private. The rate agreements were undisclosed. The enforcement mechanisms, including fines for deviating and collective denial of service, went far beyond anything the Marine Transportation Act contemplated.

The road from investigation to enforcement was neither smooth nor swift. The KFTC's four-year probe began in July 2018 with a complaint from South Korean timber importers, who had noticed that carriers were raising freight rates on Southeast Asia routes in near-perfect unison. When the commission signalled in May 2021 that the total fines could reach $672 million, the response from the industry (and from Korea's own Ministry of Oceans and Fisheries) was immediate and coordinated. The Korea Shipowners' Association, the Korea Shipping Association, and the Federation of Korean Seafarers' Unions all filed protests. Five months later, South Korea's National Assembly amended the Shipping Act itself, moving to place shipping's joint conduct outside the Fair Trade Act's reach. KFTC Chairperson Joh Sung-wook responded that the amendment could not be applied retroactively, and the $81 million final fine, about an eighth of what had originally been signalled, was announced in January 2022 regardless.6

Largest fines imposed on individual carriers for collusion on Korea-Southeast Asia routes ($m), January 2022. Source: KFTC via Maritime Executive.

Korea Marine Transport received the largest single fine at approximately $25 million on the Korea-Southeast Asia routes. International carriers were not spared: Taiwan's Wan Hai Lines was fined $9.6 million, Evergreen $2.8 million, and Maersk's regional operator Sealand nearly $2 million.1

The Supreme Court's April 2025 ruling sided with the KFTC, holding that the Fair Trade Act applies to shipping conduct that exceeds the scope of what the Maritime Transportation Act permits.3 It overturned an earlier Seoul High Court decision that had granted the maritime regulator, rather than the KFTC, sole jurisdiction over shipping coordination, a finding that had briefly put the fines in doubt.4 But the litigation is far from over. Individual carrier lawsuits remain before the Seoul High Court, and the final scope of the fines is not yet settled.

What the Case Shows

The Korean shipping cartel is not an outlier. It is a product of an industry structure that makes collusion rational. High fixed costs create the incentive. Concentrated markets reduce the number of firms that need to coordinate. Homogeneous products eliminate the possibility of competing on differentiation. And the historical tradition of permitted joint activities in shipping provides both a legal grey zone and a ready-made organisational framework.

In parallel, the KFTC has broadly revised its cartel enforcement guidelines, effective April 30, 2026. The new rules raise the minimum surcharge rate for cartel violations, cap cooperation discounts at 10 per cent (down from 20 per cent), and eliminate the previous discount for violations resulting from "minor negligence."7

Fifteen years, 541 meetings, 120 agreed freight rates, and fines totalling over $140 million across three route groups. The Korean shipping cartel is a reminder that the textbook conditions for collusion are not abstract. They describe real industries, with real firms, making real decisions about whether to compete or coordinate. The answer, in shipping, was to coordinate, quietly, systematically, and for a very long time.

Footnotes

  1. Maritime Executive, S. Korea Fines Carriers $81 Million for Collusion and Price Fixing (opens in a new tab), 18th January 2022. ↩ ↩2

  2. Maritime Executive, South Korean FTC Fines 15 Lines $63M for Collusion on Routes to Japan (opens in a new tab), 9th June 2022. ↩ ↩2

  3. Asia Business Daily, 'Just Following the Law' vs. 'Collusive Schemes': Shipping and Mobile Carriers Clash with KFTC over 190 Billion Won (opens in a new tab), 18th March 2026. ↩ ↩2

  4. Global Competition Review, KFTC's Landmark Shipping Cartel Decision in Jeopardy (opens in a new tab), 5th February 2024. ↩ ↩2

  5. Container News, Shipping Alliances, Carriers and MSC Control Almost 83% of Market (opens in a new tab), 19th May 2026Global Trade Magazine, MSC Reaches Record 21.6% Global Container Market Share (opens in a new tab), 10th June 2026. ↩

  6. Container News, Seoul court rules that freight-fixing fine was wrongful to Evergreen (opens in a new tab), 2nd February 2024. ↩

  7. Chambers and Partners, Cartels 2026: South Korea (opens in a new tab), 9th June 2026. ↩