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Food sector on edge as gov't goes on offensive on price collusion with sugar industry arrests

Published: 02 Dec. 2025, 17:35 Updated: 03 Dec. 2025, 11:35

Bags of sugar are on display at a supermarket in downtown Seoul on March 9. [YONHAP]

Government officials are increasingly questioning whether food companies have colluded to push prices higher, a shift that has put the sector on edge. The pressure has intensified with the arrest of senior figures in the sugar business. Executives across the food sector now worry the crackdown could expand beyond sugar to other staples, including flour.

According to industry sources, investigations by the Fair Trade Commission (FTC) and prosecutors into suspected price-fixing have been accelerating, culminating in the issuance of arrest warrants for a former CJ CheilJedang food division head and the chief executive of Samyang Corp. on Nov. 19 on destruction of evidence concerns. Prosecutors in September opened a probe into allegations that sugar makers had coordinated on prices. They recently asked the FTC to file a formal complaint and received the case materials.

President Lee Jae Myung speaks during a senior presidential secretariat meeting at the presidential office in Yongsan District, central Seoul, on Nov. 27. [JOINT PRESS CORPS]

Industry sources say comments by President Lee Jae Myung strengthened the resolve of prosecutors and the competition watchdog. In a Cabinet meeting on Nov. 11, Lee said the government should use its authority to “manage and control efforts to raise prices by unfairly using monopolistic or oligopolistic power, increasing the burden on ordinary people.”

Sugar producers became the first targets in part because of how the market is structured. Companies typically import raw sugar, which is tariffed at 3 percent, and process it domestically rather than importing refined sugar, which faces a 30 percent tariff. The higher tariff on refined sugar aims to protect the domestic industry and stabilize prices, but critics say it also reinforces an oligopoly. Three companies — CJ CheilJedang, Samyang and Daehan Sugar — control more than 90 percent of the domestic sugar market.

The industry has faced suspicions of collusion for years. In 2007, regulators fined the three companies 22.7 billion won ($15.46 million), 18.0 billion won and 10.3 billion won, respectively, for fixing prices. Prosecutors say the impact of prices is significant as sugar is a widely used ingredient in products like bread, snacks and beverages, ultimately influencing the prices of processed foods.

The FTC and the Ministry of Agriculture, Food and Rural Affairs say an adjustment to tariff policy is necessary to help curb collusion and stabilize prices. They have discussed expanding the quota tariff for refined sugar — a system that applies lower rates to a limited volume of imports for a set period — or lowering the rate itself to encourage more circulation of cheaper imported sugar. The Ministry of Economy and Finance is consulting with the FTC and the Food Ministry as it sets next year’s refined sugar quota tariff volume and rate.

Bags of flour are displayed at a discount store in downtown Seoul. [YONHAP]

The government’s maneuver has unsettled other companies. An executive in the food industry said firms are “closely watching whether the investigation could spread as the government presses for price stability.”

Scrutiny has already begun in the milling industry, where flour prices have been cited as a major factor behind higher bread prices. In Korea’s flour market, three companies — CJ CheilJedang, Daehan Flour Mills and Sajo Dongaone — account for about 70 percent of the market share. The FTC recently carried out on-site inspections of seven milling companies and is examining whether they coordinated pricing or adjusted shipment timing in ways tantamount to collusion.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM KYUNG-MI [[email protected]]