[Reporter’s Notebook] Sugar and Flour Price Cuts Are Just for Show

Market Cornering in the Late Joseon Novel "Heosaengjeon"
Lenient Punishments Have Allowed It to Persist for Centuries
Token Cuts in Flour and Sugar Prices Ahead of Fair Trade Commission Sanctions

In the late Joseon Dynasty, in Park Ji-won's satirical novel "Heosaengjeon," Heosaeng cornered the market on ritual fruits and horsehair, reaping profits more than tenfold. Yet Heosaeng was never punished. Several hundred years later, nothing has changed. Modern-day market cornering in the form of "cartels" has continued for decades, but the level of punishment remains low. Through a "cutting off the tail" approach, former and current employees who worked in cartel-related roles have borne only minor legal responsibility, and the companies (corporate entities) have been let off with fines far smaller than the profits they gained from collusion. As a result, this kind of market cornering has not been eradicated.

Flour milling and sugar refining companies that engaged in cartel behavior, which is defined as a "crime that harms people's livelihoods," all joined the scheme to take unfair profits, regardless of whether they were large conglomerates or small and medium-sized enterprises. Taihan Flour Mills, the No. 1 player in the flour industry, saw its operating profit more than triple during the cartel period, while Hantop, the last-place company, escaped an operating loss of 10 billion won and, for the first time in five years, posted a surplus of 3.7 billion won.

Over the past five years, while these companies were filling their coffers, the wallets of ordinary people buying essential foodstuffs such as flour and sugar became unbearably light. During the period when they were colluding (from January 2020 to October last year), flour prices rose by as much as 42%, and during the same period the consumer price index for flour climbed as high as 36%. Sugar prices soared up to 66% compared with the period before the cartel took place.

After the president declared that those responsible would be severely punished, followed by a prosecution investigation and a Korea Fair Trade Commission probe, negative developments piled up. In response, Taihan Flour Mills cut the main prices of its "Gompyo" flour products by an average of 4.6% starting on February 1. CJ CheilJedang lowered prices for food-service sugar and flour by an average of 6% and 4%, respectively, early last month, and then on February 5 reduced the prices of all consumer sugar and flour products by an average of 5%. Considering that the import price of flour, which had been in the 200-dollar-per-ton range until the end of last year, fell into the 100-dollar range at the beginning of this year, these moves amount to little more than a token gesture.

There is little sign that this modern form of market cornering will be rooted out anytime soon. First of all, the level of punishment for executives and employees who participate in cartels is far too lenient. Unlike countries such as the United States, where individuals involved in cartels can be sentenced to up to 10 years in prison, in Korea the statutory penalty for cartel-related violations of the Monopoly Regulation and Fair Trade Act is imprisonment for up to three years or a fine of up to 200 million won, which is very low.

Both academia and industry have argued for the need to impose stricter penalties on cartel activities, but discussions on revising the law have not been properly pursued. As these slap-on-the-wrist punishments continue, companies and their employees feel no real sense of alarm about collusion and repeatedly commit the same crimes. Unless the legal standards for punishing cartels are improved, countless modern-day Heosaeng figures will continue to bide their time, preying on the wallets of ordinary people.

This content was produced with the assistance of AI translation services.