South Korea's Fair Trade Commission has turned to the food industry for the first investigation by its newly rebuilt unit for large-scale, planned probes, examining suspected price-fixing in processed foods that consumers buy every day, including kimchi, tofu and instant rice. With the revival of a body once dubbed the "grim reaper of the business world" for its focus on unfair trading by large conglomerates, attention is turning to whether investigations of big companies and platform operators will also accelerate. Some in the business community, however, worry that a broader investigative scope could chill normal corporate activity.
The FTC's Priority Investigation and Planning Bureau began on-site inspections on the 14th at food companies including Daesang, Ottogi and CJ CheilJedang, according to industry sources. It is the first field investigation since the unit formally launched on Oct. 1.
The probe covers six product categories: kimchi, tofu, cooking oils and fats, gift sets, instant rice products and sauces and pastes. The FTC is believed to be checking whether the companies coordinated retail prices, the timing of price increases or the size of those increases since 2018. Also under review is whether manufacturers blocked discount competition after 2020 by restricting the prices at which retailers could sell their products. If a manufacturer required retailers not to sell below a certain price, that could amount to resale price maintenance.
Notably, the FTC's scope is widening from food raw materials to finished products. The regulator had already stepped up market surveillance by investigating suspected collusion involving sugar, flour and starch sugar used in food manufacturing. With processed foods bought directly by consumers now under scrutiny, any finding of violations is expected to have a significant impact on the industry.
The Priority Investigation and Planning Bureau was created to focus on collusion in sectors closely tied to household budgets, platform dominance and large or complex cases. The previous seven-member priority investigation team has been expanded into a bureau-level organization with three divisions and about 40 staff. Rather than handling individual cases alone, it takes complex cases involving multiple companies from the planning stage through investigation, sanctions and compliance monitoring.
Even before the unit launched, the FTC said it would give priority to collusion in areas closely linked to everyday prices. Joo Byung-ki, chairman of the FTC, also named the new bureau a key task for the second half of the year and said it would concentrate on unfair practices in areas that directly affect people's lives.
The reorganization also marks a restoration of the FTC's capacity for large-scale investigations. The former Investigation Bureau, launched in 1998, examined improper internal transactions among conglomerate groups before being abolished in 2005. Its functions were then split among units including the Market Surveillance Bureau and the Cartel Investigation Bureau. With the launch of the new bureau this year, the agency again has a body dedicated to large-scale, planned investigations.
Investigations could eventually expand beyond the food industry to major platforms and conglomerate groups. Suspected abuse of market-dominant positions by platform companies such as Coupang, NAVER, Kakao and Baedal Minjok, as well as serious unfair practices and complex cases involving large business groups, could fall within its remit.
The bureau operates with first, second and third priority investigation divisions, and handles cases from investigation through corrective orders, fines and compliance checks once the investigation management official determines a priority probe is warranted. Choi Jang-gwan, head of the Business Group Surveillance Bureau, was named its first chief. The unit is a temporary body with a term running through 2028, operating for an initial two years.
