The Korea Fair Trade Commission said on the 6th it plans to sanction the starch sugar Big Four—CJ CheilJedang, Daesang, Sajo CPK, and Samyang Corporation—on suspicion of colluding to fix sales prices of corn syrup, oligosaccharides, and other starch sugars over seven and a half years. The sanctions will be finalized after a plenary session, which is equivalent to a first-instance court for antitrust cases.
Starch sugar refers to starch made from corn and sugars made from starch, such as corn syrup, glucose, and fructose. It goes into making foods including bread and snacks, dairy products, and ice cream. For industrial use, it is also used to bond, coat, and combine in steelmaking, papermaking, and paperboard. In Korea's starch sugar market, business-to-business (B2B) transactions account for 99%, and four companies reportedly hold a 90% market share.
On this day, the Korea Fair Trade Commission (FTC) said it sent its review report containing the findings of a roughly 140-day investigation, begun in Oct. last year, into alleged starch sugar price collusion by CJ CheilJedang, Daesang, Sajo CPK, and Samyang Corporation. The FTC concluded the four companies engaged in price-fixing prohibited under Article 40, Paragraph 1, Item 1 of the Monopoly Regulation and Fair Trade Act.
Accordingly, the review report called for corrective measures including imposing penalty surcharges on the four companies and issuing an order to reset prices. The FTC can impose penalty surcharges of up to 20% of sales related to the collusion. The FTC determined that sales affected by the seven-and-a-half-year collusion by the four companies totaled about 6.2 trillion won. Accordingly, penalty surcharges of up to 1.2 trillion won could be imposed.
A price reset order is a corrective order to lower prices, distorted by collusion, to normal levels. It is a measure based on Article 42 of the Fair Trade Act. The FTC issues a price reset order when a corporation found to have colluded meets certain conditions. The conditions are: ▲ the collusive conduct continues up to the final deliberation; ▲ there is a high possibility of recurrence; ▲ the collusion period is long; and ▲ there is a need to specifically order the cessation of the collusive conduct.
Previously, in 2006, the FTC issued a price reset order in a flour collusion case, and last month it sent a review report stating that corporations in another flour collusion case should be ordered to reset prices.
Meanwhile, the FTC said it is also investigating alleged bid rigging by starch sugar companies and alleged price collusion involving by-products generated during starch sugar production. An FTC official said, "We released the findings for the most time-sensitive matter first, and we will also wrap up the two investigations promptly."