Korea Price-Fixing Scandal: $7B Food Cartel Indicted

The Seoul Central District Prosecutors’ Office announced on February 2, 2026, the indictment of 52 individuals central to a massive Korea price-fixing scandal involving flour, sugar, and electricity. Between 2015 and late 2025, these cartels manipulated markets worth approximately 10 trillion KRW (7.4 billion USD), directly driving up the cost of living for millions. Despite the scale of this corruption, which included CEOs of major firms like CJ CheilJedang and Samyang, legal experts warn that sentencing guidelines remain far too lenient. This systemic failure allows corporate collusion to persist even as global raw material prices fall.

Flour Millers and South Korean Corporate Collusion

The investigation led by the Fair Trade Investigation Division uncovered a sophisticated network of collusion among South Korea’s dominant food producers. From January 2020 to October 2025, six major flour millers conspired to fix the timing and scale of price hikes. Prosecutors revealed that this specific part of the Korea price-fixing scandal alone controlled a market valued at 5.99 trillion KRW.

During the period of collusion, domestic flour prices surged by as much as 42.4%. Even after global wheat prices stabilized, the cartel ensured that domestic prices remained roughly 22.7% higher than pre-collusion levels. This artificial inflation trickled down to every corner of the Korean diet, affecting the cost of staples such as noodles, bread, and snacks.

Sugar Cartel: A Case of South Korean Corporate Collusion

The sugar industry displayed a similar pattern of anti-competitive behavior within the broader market. CJ CheilJedang and Samyang, the nation’s leading sugar refiners, coordinated price adjustments from February 2021 to April 2024. The total scale of this market manipulation reached 3.27 trillion KRW, with prices jumping 66.7% compared to the period before the agreement.

The impact of the sugar cartel was particularly visible in the consumer price index. Data from the National Data Agency shows that while international raw sugar prices rose 31.2% over five years, domestic prices skyrocketed by 47.6%. This discrepancy highlights how domestic producers failed to pass on savings to consumers when global markets cooled, a core issue in the Korea price-fixing scandal.

Infrastructure Bids and South Korean Corporate Collusion

Beyond the grocery aisle, the investigation extended to critical national infrastructure. Ten companies, including heavyweights such as Hyosung, Hyundai, and LS, were indicted for rigging 145 bids for gas-insulated switchgear issued by KEPCO. This scheme operated for seven years, beginning in March 2015, adding another layer to the judicial investigation.

The KEPCO bidding cartel involved contracts worth 677.6 billion KRW. Prosecutors estimate the illicit gains from these rigged bids to be at least 160 billion KRW. Because these costs are ultimately baked into national utility rates, the collusion directly contributed to the rising financial burden on South Korean households and businesses.

Evidence Destruction in the Korea Price-Fixing Scandal

The investigation also brought to light the brazen methods used by corporate executives to evade detection. Companies reportedly issued internal manuals instructing employees to treat the Fair Trade Commission (FTC) as a hostile entity, referring to the agency by the pseudonym “Teacher Kong” to avoid raising suspicion in communications.

One firm went as far as directing staff to destroy evidence physically. The “Prevention Measures” document instructed employees to replace computer hard drives periodically and smash them with hammers before disposal. These efforts to obstruct justice illustrate a deep-seated disregard for regulatory oversight among those involved in the Korea price-fixing scandal.

Economic Impact of South Korean Corporate Collusion

Quantifying the total illicit gain remains a complex task for the prosecution. Using the most conservative estimates, the flour cartel’s unfair profits stand at 107 billion KRW. However, applying more stringent calculations could push that figure to 312.4 billion KRW, further emphasizing the gravity of the ongoing legal battle.

If the OECD standard—which estimates illicit gains at 15% of total revenue—is applied, the damage across all sectors reaches nearly 900 billion KRW. Regardless of the specific metric used, the consensus among economists is that the financial harm to the public far outweighs any fines currently levied against these corporations.

Global Penalties vs. the Korea Price-Fixing Scandal

The leniency of South Korean law becomes apparent when compared to global standards. In the U.S., price-fixing is a major felony under the Sherman Antitrust Act. Individuals can face up to 10 years in prison or fines of 1 million USD, and corporations often face treble damages.

In contrast, South Korean law limits imprisonment for such offenses to a maximum of three years. Fines are also capped at 200 million KRW. This disparity creates a “slap on the wrist” environment where companies view occasional fines as a mere cost of doing business, a recurring theme in any Korea price-fixing scandal.

Class Actions and South Korean Corporate Collusion

A recent class-action lawsuit in the U.S. serves as a stark contrast to the current domestic situation. Major producers like United Sugar and Domino are currently facing litigation for allegedly sharing non-public pricing data to inflate the 13 billion USD market. The U.S. legal system allows for massive private recovery, putting immense pressure on companies.

South Korea lacks a robust class-action system for antitrust violations, leaving individual consumers with little recourse. While the Korean prosecution has indicted 52 individuals, the lack of punitive damages means that the companies involved may retain a significant portion of their ill-gotten gains. For more on global business standards, visit SeoulZ.

Government Response to the Korea Price-Fixing Scandal

The scale of the collusion has triggered a sharp response from the highest levels of government. President Lee Jae-myung recently ordered a thorough crackdown, criticizing firms for offering temporary discounts as a PR stunt while maintaining high base prices. The administration is now considering “price adjustment orders” to force transparency.

Industry leaders have reacted to the pressure by announcing modest price cuts. CJ CheilJedang and Samyang have promised to reduce sugar and flour prices by approximately 4% to 6%. However, consumer advocacy groups argue that these reductions are insufficient to compensate for the years of excessive pricing during the peak of the Korea price-fixing scandal.

Market Oligopolies and South Korean Corporate Collusion

A major hurdle to fair competition in South Korea is the highly concentrated market structure. Three companies control over 90% of the sugar market, while three firms hold 70% of the flour market. In such an oligopolistic environment, tacit or explicit collusion becomes far easier to facilitate and harder to break.

Professor Lee Eun-hee of Inha University noted that domestic food prices rarely follow international trends downward. She emphasized that without structural reforms and more aggressive monitoring of operating margins, these industries will remain prone to a Korea price-fixing scandal, regardless of the outcome of a single criminal case.

Legal Reform and the Korea Price-Fixing Scandal

The Seoul Central District Prosecutors’ Office has expressed confidence in securing convictions for the indicted CEOs. Chief Prosecutor Na Hee-seok emphasized that criminal punishment for the individuals who directed the collusion is essential. He argued that administrative fines alone are no longer enough to change corporate behavior.

Proponents of reform are calling for the South Korean government to harmonize its antitrust penalties with international standards. This includes raising the maximum prison sentence and introducing higher fines that reflect the actual revenue generated during the Korea price-fixing scandal. Without these changes, the 10 trillion KRW loss may simply repeat.

Summary: Reforming South Korean Corporate Collusion

This massive legal probe has exposed deep fractures in South Korea’s market integrity. When the prices of bread, sugar, and electricity are manipulated by a handful of executives, the social contract is severely damaged. The legal system now faces a critical test: whether it can evolve from a system of lenient fines to one of genuine accountability.

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