[Q&A] FTC Chairman Joo Byunggi: "Sugar collusion will sound a warning that cheating companies will be weeded out"

On February 12, Fair Trade Commission Chairman Joo Byunggi described the imposition of a total of 408.3 billion won in fines on three sugar companies as a case of long-running "predatory collusion" in the food sector. Through this action, the Commission aims to stabilize food prices as felt by the public and to send a strong warning against unjustified price hikes by monopolistic and oligopolistic businesses.

Joo Byunggi, Chairperson of the Korea Fair Trade Commission, explaining the results of deliberations on a collusion case involving sugar manufacturers and sellers. Yonhap News.

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As a key follow-up measure, the Commission will issue a "price change status reporting order" to closely monitor sugar price trends over the next three years and block any possibility of collusion at the source. It also signaled swift and stern action on other livelihood-related items currently under investigation, including flour, starch sugar, eggs, and pork.

In particular, to strengthen deterrence against collusion, the Fair Trade Commission plans to push for amendments to the law to raise the statutory upper limit on fines from 20% to 30% of related sales and to revise the enforcement rules, thereby establishing a system in which economic sanctions far exceed the illicit gains.

The following are key excerpts from the Q&A session between the press corps and Chairman Joo.

▲What are the expected effects of the sanctions on sugar collusion and your future monitoring plans?

=These sanctions will cut off covert and persistent predatory collusion and help stabilize food prices. The sugar market is highly vulnerable to collusion because it is an oligopoly dominated by a small number of firms. To prevent this, we have issued a "price change status reporting order" and will continue to monitor price trends going forward so that any possibility of collusion is blocked in advance.

▲Why was the "price re-determination order" emphasized by the President not used this time?

=A price re-determination order can only be invoked when the state of legal violation is ongoing. In this case, the sugar companies preemptively lowered prices during the investigation, so the conditions were not met. However, in future cases we plan to actively use this order to induce genuine price reductions.

▲What is the rationale and timeline for raising the fine ceiling to 30%?

=If the profits from collusion exceed the level of sanctions, collusion cannot be prevented. We will raise the current statutory ceiling from 20% to 30% and significantly increase the weight of aggravated penalties to the level of advanced economies. We will push to revise the enforcement decree and public notices within three months and the law itself within six months so that strong economic sanctions can be implemented.

▲Do you consider the size of the illicit gains and the level of fines to be appropriate?

=It is difficult to disclose specific figures, but we believe that the fines currently imposed more than exceed the illicit gains obtained by the companies. However, the current fine ceiling under existing law (equivalent to 10% to 15% of sales) is not sufficient. If companies gain 30% and are sanctioned at 15%, collusion cannot be deterred. We will swiftly revise the relevant laws to raise the fine ceiling from 20% to 30% and establish a system of economic sanctions that exceed illicit gains.

▲Collusion has been uncovered again following a case in 2007. Were there no aggravated penalties for repeat violations?

=Under current rules, only repeat violations within five years are subject to aggravated penalties, so the 2007 case could not be formally counted as a factor for aggravation. However, this was fully taken into account during the deliberations at the full commission meeting. Going forward, we will revise the enforcement decree and public notices to raise the aggravation range dramatically, from the current 10% up to 50%, in line with the level of the European Union and other advanced economies.

▲Some argue that the Fair Trade Commission acted more slowly than the prosecution's investigation and indictment.

=That is a misunderstanding. In this case, the Fair Trade Commission has been persistently conducting ex officio investigations since 2024 and succeeded in inducing a leniency application. The Commission had already completed its investigation and brought the case to deliberation in October last year. Compared with the average processing period for collusion cases (450 days), we completed this investigation in 220 days, which is exceptionally fast. The prosecution has strength in filing criminal complaints against individuals because it has the authority to conduct searches and seizures, while the Fair Trade Commission has strength in economic analysis. We will further strengthen inter-agency cooperation going forward.

▲How do you respond to concerns that the fines may threaten the going concern of companies?

=It is not desirable for a regulatory authority, when imposing sanctions based on law and principles, to weigh them against a company's sustainability. It is deeply disappointing that companies which were hit with large fines in 2007 did not innovate their management practices at all and engaged in collusion again. A chief executive officer should not be someone who merely manages legal risks, but someone who is fully committed to innovation and fair competition. Companies that cheat and exploit should be weeded out so that innovative companies can succeed.

▲What are your future plans for monitoring collusion related to prices?

=We are currently investigating livelihood-related items such as flour, starch sugar, eggs, and pork. In particular, the flour collusion case is proceeding at such a pace that it will be ready for deliberation within February. By operating a "rapid response team" on a permanent basis, we will respond strongly so that businesses do not even dare to attempt collusion that harms people's livelihoods.

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