Ministry of Agriculture Cancels Establishment Permit of Korea Egg Producers Association, Citing "Restricted Price Competition"

The Ministry of Agriculture, Food and Rural Affairs announced that it has revoked the establishment permit of the Korea Egg Producers Association, effective today (July 29).

The ministry explained, "We determined that the association violated the conditions for its corporate establishment permit and infringed upon the public interest by restricting fair price competition through the determination and notification (announcement) of local egg prices, leading us to revoke the permit pursuant to Article 38 of the Civil Act."

In May, the Fair Trade Commission decided at a subcommittee meeting to issue a corrective order along with a fine of 594 million won against the Egg Producers Association, which has been determining and notifying egg production and sales farms of baseline local transaction prices.

Based on this, the Ministry of Agriculture has been reviewing the revocation of the association's corporate establishment permit.

According to Article 38 of the Civil Act, if a corporation engages in business outside its corporate purpose, violates the conditions of its establishment permit, or commits other acts detrimental to the public interest, the competent government authority may revoke the permit.

The Ministry of Agriculture pointed out that when granting permission to establish the non-profit corporation in January 2023, it imposed a condition on the association not to determine or notify local egg prices, yet the association continuously determined and notified local prices to its members up until January 21 of this year.

The Fair Trade Commission also viewed this behavior as collusion that restricts market price competition, prompting the issuance of the corrective order and the fine against the association last month.

The rationale is that if a specific organization predetermines future transaction prices and informs its members, farms end up selling at similar prices, which reduces price competition and makes it difficult for consumers to benefit from fair prices.

The Ministry of Agriculture explained that the Korea Institute for Animal Products Quality Evaluation objectively investigates and provides actual local egg transaction prices to help facilitate fair transactions between producers and sellers.

In addition, the ministry added that it reviewed the association's opinions through prior notice and hearing procedures in accordance with the Administrative Procedures Act, but determined there were no grounds significant enough to overturn the illegal facts.

The Ministry of Agriculture emphasized, "This is a measure against acts that broke promises and undermined a fair social order," adding, "The government plans to continuously pursue system improvements to enhance the reliability and usability of transaction information."

In response, the association argued, "The Framework Act on Administrative Procedures specifies that conditions unrelated to the permit cannot be attached when granting corporate approval, and since the association's price announcements were cleared of charges by the Fair Trade Commission in 2019, the government's demand to halt price announcements without legal basis at the time of corporate approval in 2023 is also illegal."

It further stated, "We will respond through an administrative lawsuit," and added, "We also plan to take legal action against public officials who engage in the abuse of authority and deviation of discretionary power for the benefit of a specific industry."

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.