Collusion Even in Kimchi and Tofu? ... The Corporate World's Grim Reaper Takes Aim at 'Price Hikes in Lockstep'

The FTC's Focused Investigation Planning Unit, launched this month

Targets "food" price fixing in its first case

On-site inspections at CJ CheilJedang, Daesang, Ottogi, Dongwon, Pulmuone, Sempio and others

Expected to investigate pric

A consumer browses products in the instant rice and canned seafood sections of a large supermarket in Seoul. Yonhap News Agency.

The Fair Trade Commission’s Focused Investigation Planning Task Force, launched early this month, has put the food industry on edge after deciding to make alleged price-fixing by food companies its first case. The investigation is expanding to cover potential unfair practices involving widely consumed products closely tied to the cost of everyday meals, following fines totaling trillions of won imposed this year by the FTC on sugar, flour, starch and starch-sugar manufacturers over alleged price fixing.

According to the government and industry sources on Oct. 14, the task force has launched on-site inspections at the headquarters of major domestic food companies, including Daesang, Pulmuone, CJ CheilJedang, Dongwon F&B, Ottogi, Sempio and Sajo Daerim, sending in a large team of investigators for a weeklong inspection through Oct. 20. The task force was launched on Oct. 1. It marks the return, under a new name, of the FTC’s Investigation Bureau, which was abolished in 2005 and had been known as the “business community’s grim reaper” for its tough crackdown on unfair practices by large corporations.

The task force reportedly selected the case as its first after detecting signs that the companies had improperly coordinated their actions while handling six key processed food categories — kimchi, tofu, edible oils and fats, holiday gift sets, instant rice and fermented sauces and pastes — for several years from 2018, either raising or lowering prices in succession or maintaining high prices. The FTC and the companies concerned have acknowledged that on-site inspections are under way but say they cannot confirm specific details. However, the inclusion of leading sellers in these categories among the targets has lent credence to the report.

The Fair Trade Commission's Sejong Office.

In the tofu market, for example, Pulmuone, the industry leader, raised prices of its domestic-soybean products by an average of 5.1% in February 2019. Two months later, CJ CheilJedang raised prices of products in the same category by 9.4%. In February 2021, Pulmuone and CJ CheilJedang raised tofu prices by 14% and 11.9%, respectively, around the same time. The following February, after CJ CheilJedang raised prices of its imported-soybean tofu by 8% and its domestic-soybean products by 7%, Pulmuone soon followed, raising prices of its imported-soybean products by 7-8% and those of some domestic-soybean products by 4.6%.

Similar patterns have also been observed in kimchi and instant rice. In May 2020, Daesang, the leading player in the kimchi market, raised the price of its Jongga whole-head kimchi by 5.7% for the first time in four years, since 2016. CJ CheilJedang raised the price of its Bibigo whole-head kimchi by 3% around the same time. The companies also raised kimchi prices around the same time twice in 2022 — by 5-7% in February and March, and by about 9.8-11% in September and October. In instant rice, CJ CheilJedang and Ottogi raised prices of their flagship products by 7% and 9%, respectively, in 2018, and have increased prices at similar intervals almost every year since.

Price increases were also confirmed for holiday gift sets, edible oils and fats, and fermented sauces and pastes. CJ CheilJedang and Sajo Daerim, the No. 1 and No. 2 companies in South Korea’s edible oils and fats industry, raised prices of household products such as cooking oil, canola oil and olive oil by an average of around 10-20% or more in 2021. The following year, CJ CheilJedang, Ottogi and Sajo Daerim raised prices of products for both food-service businesses and households by an average of more than 15%. In 2024, CJ CheilJedang and Sempio raised olive oil prices by an average of 30%. Then, in the first half of this year, six major edible oil companies, including CJ CheilJedang, Daesang and Ottogi, lowered factory-gate prices of some household products, including canola, grapeseed and olive oils, by 3-6%.

Prices of major fermented sauces and pastes, such as gochujang and doenjang, rose by an average of 7-11% in 2021, when CJ CheilJedang, Daesang and Sempio raised factory-gate prices for gochujang and soy sauce. In 2022, Daesang, CJ CheilJedang and other companies raised factory-gate prices for these products by around 9-13% on average. The following year, major manufacturers again raised prices of gochujang, doenjang and soy sauce by an average of 9-11%.

Last month, the FTC conducted preliminary on-site inspections of these companies to determine whether they had colluded in setting prices for fermented sauces and pastes such as gochujang and doenjang. The task force’s current on-site inspections are also examining whether the companies engaged in “resale price maintenance.” Under Article 46 of the Fair Trade Act, resale price maintenance refers to a business operator setting a transaction price for a trading partner or a downstream business and forcing them to comply. The FTC is reportedly looking into whether the food manufacturers have, since 2020, forced distribution channels such as large supermarkets and agencies not to sell their products at discounts below a specified price, and whether they penalized violators, for example, by cutting off product supplies.

As the FTC’s investigations, following those into sugar, flour, starch and starch sugar, turn their attention to specific food products, concerns are growing among the manufacturers involved. “Processed foods are directly tied to the cost of groceries for ordinary people and affect sales volumes, so we are extremely cautious about raising prices,” an industry official said. “Even when costs such as raw materials and labor rise, companies are absorbing as much of the losses as they can. It would be an enormous burden if we were found to have colluded and faced penalties such as fines.”

The FTC previously imposed fines this year of 408.3 billion won on three sugar manufacturers, 671 billion won on seven flour manufacturers, and 747.6 billion won on four starch and starch-sugar manufacturers over price-fixing allegations.

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