There Was a Reason for the Price Increase of Samgyetang... Fair Trade Commission Sanctions 7 Companies Including Harim and Olpum for Price and Shipment Collusion

Reduced Shipment Volume to Raise Chicken Prices
Collusion Again Despite Sanctions in 2006

[Sejong=Asia Economy Reporter Joo Sang-don] Seven fresh chicken meat manufacturers and sellers, including Harim and Olpum, were sanctioned by the Fair Trade Commission for adjusting shipment volumes to raise the price of Samgye fresh meat.

On the 6th, the Fair Trade Commission announced that it imposed corrective orders and a total fine of 25.139 billion KRW on seven fresh chicken meat manufacturers and sellers?Harim, Olpum, Dongwoo Farm to Table, Cherrybro, Maniker, Sajo Won, and Chamfre?who colluded on the price and shipment volume of Samgye fresh meat from July 2011 to July 2017. Among them, Harim and Olpum were also referred to the prosecution.

According to the Fair Trade Commission, the seven companies agreed from July 19, 2011, to July 27, 2017, to raise the price and adjust the shipment volume of Samgye fresh meat to increase prices. They outsource Samgye chicken farming to farms, providing chicks and feed, then receive fully grown Samgye chickens for slaughter and sale. The farms receive a fixed commission based on the volume they raise and supply. Samgye refers to small chickens mainly used for Samgyetang (ginseng chicken soup). About half of the consumption occurs during the summer’s three hottest days, known as Sambok.

Except for Chamfre, six companies agreed and implemented nine rounds of price increases for Samgye fresh meat from September 2011 to June 2015. The selling price of Samgye fresh meat is determined by discounting a certain amount from the market price announced three times a week by the Korea Broiler Association. The six member companies of the Broiler Association exploited the fact that they were the subjects of the association’s market price surveys to artificially raise and maintain prices to improve profits. They agreed on the upper limit or range of discounts they should apply or directly agreed on final price increases.

Additionally, these seven companies agreed and implemented shipment volume adjustments from July 2011 to July 2017 to reduce the supply of Samgye fresh meat in the market and raise prices, beyond just price collusion.

Except for Chamfre, six companies agreed seven times from July 2011 to June 2017 to reduce or maintain the number of Samgye chicks introduced, thereby limiting the production volume of Samgye fresh meat. Furthermore, all seven companies, including Chamfre, agreed eight times from June 2012 to July 2017 to freeze already slaughtered Samgye fresh meat, reducing the volume distributed in the market.

The Fair Trade Commission judged that the joint shipment volume adjustment by these seven companies does not fall under "government supply-demand control actions" exempt from the Fair Trade Act. Since there was no specific government administrative guidance on adjusting Samgye fresh meat shipment volumes, and the purpose of the seven companies’ volume control was to artificially raise prices to protect their profits, the Fair Trade Act applies.

A Fair Trade Commission official said, "This action detected and sanctioned collusion among companies holding over 93% of the Samgye fresh meat market share over about six years. It is significant in correcting collusion that caused price increases in chicken, a food closely related to citizens’ daily lives." He added, "We will continue to strengthen monitoring of collusion that may cause price increases in poultry, a representative staple food, and respond strictly when violations are detected."

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