South Korea's antitrust regulator has launched on-site inspections of major domestic producers of fermented sauces to determine whether they colluded on prices. The Fair Trade Commission's cartel surveillance is expanding across the food industry as the government rolls out a livelihood stabilization package centered on expanding supplies of holiday goods and supporting discounts ahead of the Chuseok holiday.
The FTC has been conducting on-site inspections of five companies — CJ CheilJedang, Daesang, Sempio, Pulmuone and Sajo Daerim — since the 1st, according to industry sources. The commission dispatched investigators to each company to examine how prices are set and what trading terms apply for major sauce products including gochujang, or red pepper paste, and soy sauce, and is focusing on whether the companies engaged in improper concerted conduct such as price-fixing, sources said.
The sauce market is one where the FTC has caught collusion before. In 2011, the commission found that CJ CheilJedang and Daesang had colluded on promotional discount rates for gochujang products sold at large discount stores, issuing corrective orders and imposing a combined 1.052 billion won in fines. It also filed criminal complaints against both corporations and the executives involved. The two companies were found at the time to have agreed to cap discount rates on promotional products at discount stores at a certain level.
The FTC has sharply raised its level of scrutiny of price-fixing in food and household necessities to stabilize consumer prices. This year, the commission caught three sugar manufacturers in a price-fixing scheme and imposed a combined 408.3 billion won ($302 million) in fines, levied 671 billion won ($496 million) on seven flour makers, and 747.6 billion won ($553 million) on four producers of starch and starch sugar. It also uncovered collusion among printing paper manufacturers and set fines of 338.3 billion won ($250 million), bringing total fines imposed by the FTC this year to more than 2 trillion won ($1.5 billion).
The large cartel penalties have eased part of the burden on household prices. According to the FTC's second-half business plan released in August, prices of cartel-affected items such as flour and sugar fell by as much as 26.5%, while prices of related products including bread, instant noodles and snacks dropped by as much as 14.6%.
An FTC official said the commission could not confirm details of an ongoing investigation.
