South Korea's antitrust regulator has launched on-site inspections of major domestic makers and sellers of traditional fermented sauces to determine whether they colluded on prices. The Fair Trade Commission's cartel surveillance over consumer prices appears to be widening across the food industry as the government pushes a package of livelihood stabilization measures, including expanded supply of holiday goods and discount support, ahead of the Chuseok holiday.
According to industry sources on the 2nd, the FTC has been conducting on-site inspections since the previous day at five companies: CJ CheilJedang, Daesang, Sempio, Pulmuone and Sajo Daerim. FTC investigators visited each company to examine the pricing process and transaction terms for key sauce products, including gochujang, or red pepper paste, and soy sauce, according to sources. They are also looking into whether the companies engaged in unfair collective conduct, such as agreeing in advance on prices or sales terms, sources said.
The sauce market is one where the FTC has previously uncovered price-related collusion. In 2011, the commission found that CJ CheilJedang and Daesang had colluded on promotional discount rates for red pepper paste products sold at large discount stores. The two companies were found at the time to have agreed to cap discount rates on promotional products at a certain level. The FTC imposed corrective orders and a combined 1.052 billion won in fines on the two companies and referred both corporations and related executives to prosecutors.
The latest inspections align with the FTC's broader cartel surveillance stance, which has expanded beyond the sauce market to the food industry as a whole. The commission has stepped up monitoring of price collusion in food and household necessities this year in the name of price stability.
The FTC previously uncovered price collusion among three sugar makers and imposed a combined 408.3 billion won in fines. It also levied 671 billion won on seven flour makers and 747.6 billion won on four makers of starch and starch sugar. The commission also uncovered collusion among printing paper makers and set fines of 338.3 billion won. Fines imposed by the FTC this year have already exceeded 2 trillion won.
Prices of the products involved have actually fallen following the large-scale cartel penalties. According to the FTC's plan for major second-half operations released in August this year, prices of cartel items such as flour and sugar fell by as much as 26.5%, while prices of related products that use them as raw materials, including bread, instant noodles and snacks, dropped by as much as 14.6%.
An FTC official said, "We cannot confirm specific details about matters currently under investigation."
