Soybean milk producers fined for price fixing

Industry

Published: 28 Feb. 2011, 01:10

Soybean milk producers fined for price fixing

Korea’s antitrust agency yesterday imposed penalties on the country’s top three soybean milk producers for price fixing.

The Fair Trade Commission announced that it has decided to impose a 13.1 billion won ($11.6 million) fine for collusion on price increases and limiting the giveaway of free samples among the producers.

The three companies are Dr. Chung’s Food, Sahmyook Foods and Maeil Dairies, which have a combined market share of 82 percent in Korea.

Dr. Chung’s Food was fined the most with 9.9 billion won, followed by Maeil with 1.7 billion won and Sahmyook with 1.5 billion won.

The country’s soybean milk market is expected to be worth 400 billion won, an increase of 20 percent from the previous year, due to increased demands for healthy food products.

Since the price of soybean per kilogram increased about 80 percent from 315 won to 557 won between December 2006 and December 2007, Dr. Chung’s Food, the leader in the market with a 44 percent share, proposed and colluded with the No. 2 company Sahmyook Foods, which has a 24 percent share, to collude on raising prices in January 2008.

The two companies increased their prices by more than 10 percent in February 2008.

Maeil Dairies did not collude with Dr. Chung’s Food on this occasion.

When soybean prices continued to increase to 707 won per kilogram in July 2008, the three companies once again colluded on prices based on worries that sales might fall if they raised prices separately.

Dr. Chung’s Food proposed a price increase this month, but then backed away from the proposal. The companies also were found to have agreed on limiting free giveaways of soybean milk because of the threat it posed to profits.

“Such incidents are typical examples of companies trying to avoid sales losses by increasing prices separately,” said an FTC official. “During periods of rising raw material prices, such incidents can frequently happen.”

By Jung Seung-hyun [seungjung@joongang.co.kr]