Legal battles are widening over the large fines the Fair Trade Commission imposed on food companies for fixing sugar and flour prices. Courts have granted, one after another, requests from sugar makers to suspend enforcement of the FTC's fine orders, following similar decisions for flour makers. In the main trials ahead, the central issue is expected to be how far the transactions and time periods in which collusion actually affected prices can be counted in calculating the fines.
The Seoul High Court on the 17th granted a request by Samyang Corp to suspend enforcement of penalties tied to flour price-fixing, according to legal and food industry sources on the 22nd. As a result, the order for Samyang Corp to redetermine its prices and the order to pay the fine are halted until the main trial rules on whether the measures were lawful.
The court found that enforcing the measures as issued could cause Samyang Corp damage that would be difficult to repair, and that there was an urgent need to prevent it. By contrast, it ruled that the FTC had not sufficiently shown that suspending enforcement could seriously affect the public interest.
On the same day, the court granted a suspension request filed by Sajo Dongaone, halting enforcement of about 183.1 billion won ($131.7 million) in fines and other penalties related to the flour collusion. Earlier, on the 10th, a suspension was also granted for a payment order covering 112 billion won ($80.6 million) of the fines imposed on Daehan Flour Mills.
In May, the FTC concluded that seven companies — Samyang Corp, Sajo Dongaone, Daehan Flour Mills, CJ CheilJedang, Daesun Flour Mills, Samhwa Flour Mills and Hantop — had colluded on flour sales prices and sales volumes from 2019 through last year. It ordered the companies to redetermine prices and imposed fines totaling 671 billion won ($482.8 million).
Penalties over sugar price-fixing are also being blocked one after another by the courts. Samyang Corp requested a suspension of an order to pay 130.3 billion won ($93.8 million) in fines imposed over sugar collusion and won a favorable ruling in June. Daehan Sugar also obtained a suspension of an order covering 127.4 billion won ($91.7 million) in fines. With suspensions granted in both the sugar and flour cases, attention is turning to whether companies penalized over starch sugar collusion will also take legal action.
Separately from the suspension rulings, whether the fines themselves were lawful will be decided in the main trials. The companies are expected to focus their challenges on the scope of sales and the duration of the collusion that the FTC used as the basis for calculating the fines. Points of contention are likely to include whether sales can be counted in the fine calculation when a transaction occurred during the collusion period but its price had already been set beforehand, and whether the FTC properly determined when the collusion began and ended.
"Sugar, flour and starch sugar differ in their transaction structures and pricing methods depending on whether they are sold for food manufacturing or for industrial uses such as papermaking," an industry official said. "Whether it is appropriate to include sales of industrial-use products in the base for calculating collusion fines is also expected to be disputed in the main trials."
