Three Companies Agree to Plead Guilty and Pay a Total of $236 Million in Criminal Fines and Civil Damages South Korea-based companies SK Energy Co. Ltd., GS Caltex Corporation, and Hanjin Transportation Co. Ltd. have agreed to plead guilty to criminal charges and pay criminal and civil fines for their involvement in a decade-long bid-rigging conspiracy that targeted contracts to supply fuel to United States Army, Navy, Marine Corps, and Air Force bases in South Korea, the Department of Justice announced today. South Korean petroleum and refinery companies and their agents, including the defendants and their co-conspirators, participated in a combination and conspiracy to suppress and eliminate competition during the bidding process for these fuel supply contracts. SK Energy, GS Caltex, and Hanjin have agreed to cooperate with the department’s ongoing criminal investigation. The plea agreements are subject to court approval.
In separate civil resolutions, SK Energy, GS Caltex, and Hanjin have agreed to pay a total of approximately $154 million to the United States for civil antitrust and False Claims Act violations related to the bid-rigging conspiracy. These settlements reflect the important role of both Section 4A of the Clayton Act and the False Claims Act to ensure that the United States is fully compensated when it is the victim of anticompetitive conduct.
The Criminal Case:
According to three felony charges filed today in the U.S. District Court for the Southern District of Ohio in Columbus, the Defense Logistics Agency and the Army and Air Force Exchange Service are two U.S. Defense Department agencies that contract with South Korean companies to supply fuel to the numerous U.S. military bases throughout South Korea. Beginning at least in or around March 2005 and continuing into 2016, South Korean petroleum and refinery companies and their agents, including the defendants and their co-conspirators, participated in a combination and conspiracy to suppress and eliminate competition during the bidding process for these fuel supply contracts. SK Energy, GS Caltex, and Hanjin have agreed to cooperate with the department’s ongoing criminal investigation. The plea agreements are subject to court approval.
A criminal violation of Section 1 of the Sherman Act carries a maximum fine of $100 million for corporations. The maximum fines may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
The Civil Case:
The Department’s Antitrust Division today filed a civil antitrust complaint in the U.S. District Court for the Southern District of Ohio, and at the same time filed proposed settlements that, if approved by the court, would resolve the lawsuit against SK Energy, GS Caltex, and Hanjin for their anticompetitive conduct targeting the U.S. military in South Korea.
As a result of this conduct, the United States Department of Defense paid substantially more for fuel supply services in South Korea than it would have had SK Energy, GS Caltex, and Hanjin competed for the fuel supply contracts. Under Section 4A of the Clayton Act, the United States may obtain treble damages when it has been injured by an antitrust violation. The proposed settlement provides that SK Energy pay $90,384,872, GS Caltex pay $57,500,000, and Hanjin pay $6,182,000 to the United States to resolve the civil antitrust violations. In addition to the payments, SK Energy, GS Caltex, and Hanjin have agreed to cooperate with the ongoing civil investigation of the conduct and to abide by antitrust compliance program requirements. The amount paid by each defendant exceeds the amount of the individual overcharge and reflects the value of defendants’ cooperation commitments and the cost savings realized by avoiding extended litigation.
The payments will also resolve civil claims that the United States has under the False Claims Act against SK Energy, GS Caltex, and Hanjin for making false statements to the government in connection with their agreement not to compete. The Civil Division has entered into separate settlement agreements with the companies to resolve these claims.
The United States’ False Claims Act civil investigation resulted from a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act. Those provisions allow for private parties to sue on behalf of the United States and to share in any recovery.
