Will Pork Belly Finally Get Cheaper? Nine Companies Fined for Telegram Price-Fixing Scheme

Collusion on General Meat Supply Prices and Branded Pork Quotations
Lower Bid Price Limits Shared via Secret Telegram Chat Rooms

It has been revealed that the price of pork, a staple on South Korean dining tables, was artificially inflated due to the meticulous price-fixing activities of meat processing companies. Companies involved in supplying pork to Emart, the supermarket chain with the largest market share, even created secret Telegram chat rooms to manipulate bidding prices, and have now been caught by the Korea Fair Trade Commission (KFTC).

On March 12, the KFTC announced that it had imposed corrective orders and a total fine of 3,165 million won on nine meat processing companies that had colluded on bid or quotation prices in advance when supplying pork to Emart. The commission also decided to refer six of these companies for prosecution. The nine companies are Daesung Industrial, Daejeon Chungnam Swine Livestock Cooperative, Bukyung Swine Cooperative, CJ Feed & Care, Dodram Food, Bodam, Sunjin, Farm Story, and Haedream LPC. Among them, due to the severity of the case, six companies including Dodram Food will be reported to the prosecution.

When the market price rose by 2%, the bid price 'soared' by 10%

Pork displayed at a large supermarket in Seoul. Photo by Yonhap News Agency.

This case marks the first time that the authorities have sanctioned price-fixing in the pork supply process. The collusion occurred extensively across the entire market, both in "general meat" (sold without processor labeling in supermarkets) and "branded meat" (sold with individual company labels).

Eight suppliers of general meat, concerned that delivery prices would fall ahead of Emart’s anniversary event in November 2021, created a Telegram chat room. During 14 rounds of bidding held over about three months, they pre-set minimum bid prices for items such as pork belly and pork neck in eight cases, and put the plan into action. The total contract amount reached 10.3 billion won.

The collusion in the branded meat market was equally sophisticated. Five companies, including Dodram Food, held ten rounds of advance price or adjustment margin agreements for each pork cut over approximately two years and three months starting July 2021. They coordinated supply prices to keep differences between brands small, fearing that higher-priced pork would not sell if there was a large price gap. The total value of contracts made through this scheme amounted to 8.7 billion won.

Consecutive Collusion Cases at CJ Affiliates

The power of collusion was strongly reflected in supermarket prices. Moon Jaeho, Director General of Cartel Investigation at the KFTC, stated, "At the time of the first agreement in November 2021, the standard market price for pork increased by 2.2% compared to the previous day, but the accused companies' quoted prices surged by 9.8%." He explained, "They submitted prices more than four times higher than the market increase." Conversely, when the market price fell by 11.4% in December 2021, their quoted prices dropped by only 6.4%. Moon added, "When market prices rose, they raised their prices even more, and when prices fell, they lowered them less, resulting in higher prices overall."

This case includes CJ Feed & Care, an affiliate of CJ, among those referred for prosecution. Recently, CJ CheilJedang has also been implicated in sugar price-fixing (decision), as well as flour and starch syrup price-fixing (investigation report submission), and now yet another CJ-related company has been caught in pork price-fixing. This frequency of involvement in collusion cases within such a short period is highly unusual.

The KFTC expects that this enforcement action will serve as a stern warning against price-fixing in the food sector, which leads to higher living costs for the public. Moon stated, "We will also swiftly handle ongoing investigations into collusion in major foodstuffs such as flour, starch syrup, and eggs, and will take strict measures if violations are confirmed."

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