Gas stations will now be able to purchase up to 40% of their fuel products from companies other than their contracted refining company, as specified in the revised standard contract. The previous practice of post-settlement, where final prices were determined about a month after receiving products, will also be fundamentally abolished.
The Fair Trade Commission (KFTC) announced on August 26 that it has revised the 'Standard Agency Contract for the Oil Distribution Industry' to include these changes.
This revision aims to improve the longstanding practices of exclusive transactions and post-settlement between refining companies and gas stations. Concerns have been raised that these practices have increased the operational burdens on gas stations amid rising fuel prices due to recent conflicts in the Middle East.
Historically, the gas station industry has utilized full purchase contracts, which required them to source all products from a specific refining company. This limited their ability to compare prices and supply conditions from other companies.
The revised standard contract specifies that if a gas station purchases more than 60% of its products from the refining company with which it has a trademark agreement, it can buy up to 40% from other companies.
However, this revision does not introduce mixed purchasing as a new practice. Current fair trade laws already prohibit refining companies from forcing gas stations to purchase 100% of their products. The goal is to incorporate the legally guaranteed principle of mixed purchasing into the standard contract to encourage actual changes in trading practices.
The contract also prevents refining companies from discriminating against gas stations based on mixed purchasing. It includes provisions that prohibit unfair discrimination regarding product supply prices, quantities, and other trading conditions.
The pricing method will also change.
Previously, gas stations would initially purchase products at the price at the time of order and then settle the final supply price based on the monthly average price about a month later. This structure made it difficult for gas stations to know the actual purchase price at the time of buying products.
Going forward, gas stations will generally confirm the supply price at the time of ordering as the final price for settlement. The KFTC believes this will reduce uncertainty in determining sales prices and planning operations, even in volatile price situations.
However, an exception will be made for gas stations that prefer the post-settlement method. If requested separately, they can still apply post-settlement, but the settlement period will be shortened from the previous month to within seven days.
This regulatory improvement follows a cooperative agreement signed in April between the Korea Gas Station Association and four refining companies: SK Energy, HD Hyundai Oilbank, S-OIL, and GS Caltex.
At that time, the gas station industry and refining companies agreed to transition from full purchase contracts to mixed contracts, allowing for the purchase of more than 60% of products from a specific refining company, and not to unfairly discriminate based on purchasing ratios. They also agreed on the prior public announcement of daily sales prices by refining companies and the abolition of the post-settlement system.
The KFTC has revised the standard contract based on feedback from the Korea Gas Station Association and the four refining companies to ensure that these agreements are reflected in actual contracts between refining companies and gas stations.
The KFTC expects that expanding mixed purchasing will enhance gas stations' product selection and promote competition among refining companies regarding supply prices. By confirming supply prices at the time of ordering, gas stations will also have more autonomy in determining consumer sales prices.
A KFTC official stated, "We actively encourage the use of the revised standard agency contract and plan to conduct future surveys on agency transactions to monitor whether trading practices in the oil distribution industry are actually changing."
* This article has been translated by AI.
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