Record-Breaking Fine: 747.6 Billion Won Penalty for Price-Fixing

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Companies that have colluded for over seven years on the prices of starch and starch sweeteners—essential ingredients for food products like snacks, bread, beverages, ice cream, and beer, as well as industrial raw materials for paper and steel—are set to face a record-breaking fine.

The Korea Fair Trade Commission (KFTC) announced today (July 7) that it will impose a total of 747.6 billion won in fines on four companies—Daesang Corp., Sajo CPK Co., Ltd., Samyang Corp., and CJ CheilJedang Corp.—for colluding on prices for business-to-business (B2B) starch and starch sweetener transactions over a period of seven years and five months.

This amount exceeds the 671 billion won fine imposed on seven companies in May for price-fixing on flour.

It is the largest fine ever imposed by the KFTC for a price-fixing case.

Following a request from the prosecution, which investigated the starch and starch sweetener collusion case, the KFTC has previously filed complaints against the corporate entities and executives of these four companies.

According to the KFTC's ruling, the four starch and starch sweetener companies were found to have distorted competitive order through secret agreements, despite receiving policy protection from the government.

These companies jointly import corn, the primary ingredient for starch and starch sweeteners.

Considering the impact on national consumer prices and industrial competitiveness, the government has applied a 0% tariff rate to approximately 2 million tons of processing corn annually since April 2021.

Nevertheless, it was discovered that the four companies reached agreements on the timing and scale of price increases and decreases 13 times between May 2018 and October of last year, and subsequently implemented them.

Specifically, they were found to have agreed to raise sales prices eight times to quickly reflect cost increases during periods when corn prices rose.

Investigations revealed that they colluded five times to minimize the extent of price cuts and delay them as much as possible in response to demands from clients when corn prices fell.

In this process, the four companies lowered prices for large-scale clients demanding reductions while maintaining sales prices as much as possible for small-scale clients and agencies to minimize backlash and maximize profits.

To minimize resistance from clients when changing prices, the four companies also reached specific agreements on the scale and timing of the price changes, as well as the content and timing of official letters, including justifications such as exchange rates and raw material costs.

In particular, they would agree on target prices for each starch and starch sweetener product and then notify clients of higher amounts, pressuring and inducing them to accept the target prices as much as possible.

The four companies were found to have thoroughly checked whether the agreements were being implemented while sending official letters to clients.

On the days they were scheduled to send official letters to clients, representatives from the four companies would visit each other to meticulously verify that the letters correctly stated the price increase margins, timing, and recipient addresses for each product.

They even followed each other to the post office to ensure the letters were sent.

Furthermore, after notifying all clients of their price change plans, the four companies would engage in price negotiations with clients when necessary.

During these negotiations, the starch company with the highest transaction volume for a specific client would lead the discussion, while the other companies would propose higher prices than the lead company, engaging in a reciprocal strategy to ensure prices were set at the target level.

For example, after the four companies agreed on a sales price of 730 won per kilogram, the lead company would propose the target price of 730 won to the client, while the other companies would propose higher prices, such as 735 to 740 won, to induce the client to accept the target price.

The KFTC pointed out that these four companies held a market share of 95.7% for starch and 86.4% for starch sweeteners in the B2B market, exerting a significant impact on prices.

In particular, the four companies were found to have passed the burden of corn price fluctuations onto their clients and maximized their own unfair profits during a time when the national economy was struggling due to the COVID-19 pandemic and the Russia-Ukraine war.

In November 2022, when international corn prices were soaring due to the war, they sharply increased sales prices to 971 won per kilogram, up to 73% higher than when the collusion began (559 won per kilogram in May 2018).

While corn prices were falling, they reduced sales prices by less than the decrease in costs.

Due to this response, their operating profits actually improved even when they lowered prices.

The KFTC reported that Daesang's operating profit improved from 90.1 billion won in 2023 to 150.5 billion won in 2025, and Sajo's from 14 billion won to 36.1 billion won.

The KFTC determined that the collusion among the four companies led to rising prices, with the burden ultimately transferred to clients, agencies, and eventually the general public, who are the final consumers.

The relevant sales revenue affected by the collusion of the four starch and starch sweetener companies reached 6.0525 trillion won.

The KFTC took into account their cooperation during the investigation and deliberation as a factor to reduce the fines.

However, it added that a 10% surcharge was applied to Daesang due to its history of repeated legal violations.

Along with the fines, the KFTC issued a cease-and-desist order and an order to independently redetermine prices.

The four companies must reset the prices of starch and starch sweetener products sold in Korea to pre-collusion levels and report the details every half year for the next three years.

This order to independently redetermine prices is the fourth of its kind, following sanctions on flour collusion (April 2006, May 2026) and printing paper collusion (April 2026).

The KFTC explained that it considered the long duration of the collusion and the high risk of recurrence due to the oligopolistic structure of the domestic starch and starch sweetener market.

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