Six Paper Companies Used Public Phones and Pseudonyms for Four-Year Price Collusion... Fined 338.3 Billion Won

4 Trillion Won Collusion Over Four Years, Fines of 338.3 Billion Won
Printing Paper Prices Up 71%... Costs Passed on to Publishers and Parents

Six paper companies, which control 95% of the domestic printing paper market, were caught engaging in collusion using tactics reminiscent of a spy operation, such as public telephones and pseudonyms. The Korea Fair Trade Commission has imposed a record fifth-largest fine of approximately 330 billion won on these companies, and issued an exceptionally strong corrective order requiring them to withdraw the collusive prices and set new prices.

Public telephone call records of paper manufacturers involved in collusion. Korea Fair Trade Commission.

Collusion Tactics Reminiscent of Spy Operations... Use of Pseudonyms and Public Phones

On April 23, the Korea Fair Trade Commission announced that it would impose a total fine of 338.3 billion won on six paper manufacturers (Hansol Paper, Moorim Paper, Moorim P&P, Moorim SP, Korea Paper, and Hongwon Paper) for colluding to fix printing paper prices. In addition, Korea Paper and Hongwon Paper will be referred to the prosecution, and a price re-determination order has also been issued.

From February 2021 to December 2024, over a period of about 3 years and 10 months, these companies held more than 60 online and offline meetings, continuing their secret agreement. They agreed to increase the base price of printing paper on two occasions and to reduce the discount rate on five occasions, resulting in a total of seven price hikes. Their methods to evade the Fair Trade Commission's monitoring were particularly elaborate. They used pseudonyms when reserving meeting venues and communicated via public telephones or mobile phones registered under other people's names to avoid detection. Their efforts to conceal the collusion resembled scenes from a spy movie.

Their collusion tactics were unscrupulous. To avoid suspicion from the market, they agreed to send price increase notices at staggered times by company. However, when they could not agree on who would announce the price hike first, they determined the order by tossing coins or dice.

Nam Dongil, Vice Chairman of the Fair Trade Commission, explained, "It appears that they resorted to the absurd method of tossing coins or dice because each company wanted to avoid the burden of raising prices first." As a result of this collusion, the price of printing paper used for textbooks, study materials, photo books, and single-volume books soared by an average of 71% during the period of collusion. The total sales related to the collusion reached approximately 4 trillion won. The resulting illicit profits were entirely passed on to increased production costs for publishers and higher educational expenses for parents and other consumers.

'Price Redetermination' Order Issued as Well... "Rooting Out Cartel Practices"

Evidence of Pseudonym Usage by Paper Manufacturing Companies Involved in Collusion. Korea Fair Trade Commission.

This fine is the fifth largest in the history of collusion cases handled by the Fair Trade Commission and the largest ever for a paper industry cartel. The Commission imposed the record fine after considering the market’s characteristics, where new business entry is difficult, and the entrenched nature of collusion. In addition, since the collusive pricing agreed upon during the seventh round of meetings is reportedly still in effect, the Commission has ordered that prices for printing paper products sold domestically must be independently re-determined to restore competition to pre-collusion levels. Companies will also be required to report changes every six months for the next three years.

Vice Chairman Nam emphasized, "This action aims to alleviate the burden on the printing and publishing industry, which is struggling due to instability in the Middle East and other factors. Going forward, we will also swiftly address collusion cases in food sectors such as flour, starch sugar, and eggs, to help stabilize prices for daily necessities."

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