The Korea Bakery Association, which has 4,000 member companies nationwide, is pursuing a damages lawsuit against sugar and flour corporations suspected of price-fixing. The reason is that the burden of surging materials and supplies costs due to collusion was passed on to small business owners such as neighborhood bakeries and confectionery shops. If a collective response at the association level materializes, it could expand into additional lawsuits by individual confectionery companies and small and midsize food companies.
According to legal sources on the 23rd, the Korea Bakery Association is reviewing a class action, including a claim for damages, against corporations suspected of colluding on sugar and flour prices. The association plans to begin the process of selecting a law firm to represent the case after gathering opinions from member companies.
Founded in 1963, the Korea Bakery Association is the organization representing the domestic confectionery and bakery industry. It has about 4,000 member companies nationwide. Most are small businesses, such as neighborhood bakeries and individual confectionery shops. The reason the association moved to consider a collective response is that small business owners who are members were hit directly by the sharp rise in materials and supplies prices. Prosecutors believe that due to collusion by sugar and flour companies, flour prices rose as much as 42.4% during the period of the offense, and sugar prices rose as much as 66.7%.
An association official said, "The damage to small business owners from collusion by sugar and flour companies is significant," and added, "Although nothing has been finalized yet, we are reviewing legal response options, including lawsuits, to help them."
According to prosecutors, the total scale of the sugar and flour price-fixing is 9.2628 trillion won. The Fair Trade Investigation Department of the Seoul Central District Prosecutors' Office (Director General Na Hee-seok) indicted flour millers including Daehan Flour Mills, Sajo Dongaone, and Samyang Corporation in February on charges of colluding on flour prices, and indicted CJ CheilJedang, Samyang Corporation, and TS Corporation in November last year on charges of colluding on sugar prices.
In particular, the sugar price-fixing case is set for a first-instance verdict at 10 a.m. today. Prosecutors have sought prison terms for former CJ CheilJedang Korea head of foods Kim Sang-ik and former Samyang Corporation CEO Choi Nak-hyun.
In legal circles, some said that if an association-level lawsuit gets underway in earnest, additional lawsuits by individual small business owners and small and midsize food companies could follow. In fact, related lawsuits have already begun. On the 21st, the head of a well-known regional confectionery company, identified as A, filed a complaint with the Seoul Central District Court seeking 20 million won in damages against CJ CheilJedang, Samyang Corporation, and TS Corporation. The argument is that, due to these corporations' collusion, the company had to purchase materials and supplies at higher prices and suffered losses.
A legal source said, "The Korea Fair Trade Commission has already imposed sanctions, and in the sugar price-fixing case, the corporations have admitted the charges in court," adding, "If a damages suit is filed, the plaintiffs are likely to fight from a favorable position."