"Prices Went Up Again": Inside the Revival of the Fair Trade Commission's "Grim Reaper" Probe on Price Fixing

[Anchor]

It is time for "Friendly Economy" on Thursday, and reporter Han Jiyeon is here with us. Han, I understand the Fair Trade Commission is investigating ramen manufacturers for alleged price fixing.

[Reporter]

That is correct. The antitrust regulator is looking into whether ramen makers coordinated the timing and margins of their price increases.

Following investigations into kimchi and tofu, this is the second major case targeted by the Fair Trade Commission's (FTC) specialized task force.

Many of you have probably picked up a pack of cup ramen and thought, "Prices went up again."

In August, Nongshim, and in September, Paldo and Ottogi raised the prices of their cup ramen by an average of 5% to 6%.

For example, a cup of Jin Ramen went from 1,200 won to 1,300 won at large supermarkets, while the prices for packaged bag ramen were kept unchanged by all three companies.

Of course, the FTC has not confirmed whether the current investigation is specifically examining those past price hikes.

Yesterday, on the 28th, investigators secured sales data for ramen from the headquarters of four companies: Nongshim, Ottogi, Samyang Foods, and Paldo.

Reports indicate they are also examining whether the manufacturers dictated resale prices—the prices at which supermarkets resell the products to consumers—and blocked discounts.

The team in charge of this investigation has a rather intimidating nickname.

Comprising about 40 members, it is being evaluated as the effective revival—after 21 years—of the FTC's investigation bureau, once dubbed the "Grim Reaper."

The first case is still under active investigation.

The probe covers not only kimchi and tofu, but also instant rice, sauces and pastes, and holiday gift sets.

At the core of the probe is whether food companies such Daesang, Ottogi, and CJ CheilJedang coordinated prices in advance starting in 2018.

Why food items, you might ask? The FTC's policy is to tackle price-fixing on essential living costs first.

Having targeted raw materials like sugar and flour, the focus has now shifted to the processed foods we put in our grocery carts.

However, past FTC sanctions on ramen price fixing were overturned in court, so the final outcome remains to be seen.

[Anchor]

Even when price fixing is uncovered, it feels like we rarely hear about consumers or victims receiving any compensation.

[Reporter]

Unfortunately, that is not an easy feat.

Fines go entirely into the national treasury, meaning virtually nothing goes back to consumers.

This year alone, fines for food price fixing involving items like sugar and flour have exceeded 1.8 trillion won.

At this point, some might wonder, "Can't I just file a lawsuit myself?"

You certainly can file a lawsuit. The real challenge is the burden of proof.

Consumers have to prove the actual damages and the exact amount of loss themselves.

This means figuring out how much extra they paid and what the price would have been had there been no collusion.

Meanwhile, businesses are taking legal action.

The Korea Confectionery Association, representing some 4,000 neighborhood bakeries, announced in April that it would review a class-action lawsuit, and 12 Chinese restaurants actually filed a lawsuit in July against sugar and flour suppliers.

Their argument is that the burden of price fixing has been unfairly shifted onto small business owners and consumers.

The National Council of Consumer Organizations is demanding the introduction of a class-action lawsuit system and that the scale of damages be calculated and made public.

Meanwhile, proposals to create a consumer support fund using a portion of the collected fines have remained stagnant for 20 years.

The FTC also faces a dilemma.

While virtually the entire public suffered damages, any support fund could only help a limited number of people.

In the case of flour, the FTC did issue an order to reset prices back to the competitive level prior to the collusion.

However, some companies applied to suspend the enforcement of the order, which a court accepted last month.

[Anchor]

Finally, let us talk about the prices of everyday necessities.

[Reporter]

The prices of 39 food and household goods rose by an average of 0.2% over the past year.

Among them, soy sauce and eggs surged by more than 10%.

These figures are based on a third-quarter survey of everyday necessity prices in the Seoul and Gyeonggi regions.

Prices increased for 20 items and decreased for 19.

Looking at the average alone, the changes seem mild.

However, what shoppers feel at the grocery store is likely quite different.

A tray of eggs costs 9,348 won, up nearly 900 won over the past year, while a large 1.7-liter bottle of brewed soy sauce has become nearly 2,000 won more expensive.

Mayonnaise and ketchup both rose by 7.9%, reflecting factory price hikes implemented by manufacturers in July and August.

Conversely, the price of tofu dropped by more than 12%, and flour—which faced regulatory sanctions for price fixing this year—became 3.7% cheaper.

Compared to the previous quarter, the surveyed items rose by an average of 0.8%, with instant rice prices jumping by 5.1%.

A regional comparison also revealed a stark price gap for ssamjang (mixed soybean paste).

Prices in the Seoul-Gyeonggi-Incheon area were more than 34% higher than in the Honam region.

Consumer organizations pointed out that some companies which raised prices under the pretext of rising raw material costs actually saw their cost-of-goods-sold ratios decrease or their profits increase.

They demand that if companies want to raise prices, they should provide clear justification and offer substantive measures rather than short-lived promotional discounts.

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