Mechanics Fined for Fixing Oil Change Prices

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Automotive mechanicsin a region of South Korea have beenpenalized by authorities for colluding to fix prices on motor oil changes.The countrys Fair Trade Commission fined the car mechanics association in the Masan region 9 million won (U.S. $8,700) for violation of fair trade rulesandordered that the group take corrective actions.

The commission found out that the association has colluded to set oil change prices and then raised thecharge by 10 percent to 60 percent every two or three years, depending on vehicle model. The association would inform members by posting a price table on its Internet forum or delivering a notice to members in person.

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Car centers in the region would charge the same fee for their automotive engine oil exchange services, Fair Trade Commission investigator Jeon Sunpyo said. The reason was proved to be price fixing. This kind of practice has beenprevalent in the country. With this rule, FTC [will] form sound marketsituations for fair competition.

Automotive mechanics are a major channel for consumer engine oils sales in South Korea. There are 35,221 mechanic stores nationwide, and they have regional associations to guard their interests and rights.

Most consumersget their engine oil changed by mechanics, particularly at small neighborhood shops known as car centers. Sixty percent of customers at car centers entrust mechanics to choose their engine oil, according to a report released in 2013 by Korea Consumer Agency, a government organization for consumer protection. Of the forty percent who choose for themselves, most follow brand recommendations of auto manufacturers.

Some consumers purchase oil at discounts through Internet stores like Oiltop.co.kr and Mujugipot.com, but most who do still take their oil to car centers for installation. Typical installation fees are 15,000 to 25,000 won. Only a small portion of South Koreans change their own oil because ofthe low fees charged by mechanics,the difficulties of disposal of used engine oil and lack of knowledge and experience with car care.

In a 2013 survey, consumer group Green Consumer Network found the average cost in Korea for oil changes – including oil, filters and service – to be 56,574 won (U.S. $50).

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