Korean Sugar & Starch Cartel: Facing Billions in Fines & Price Fix Investigations

South Korea’s Fair Trade Commission (KFTC) has launched a formal investigation into alleged price fixing by the country’s four largest starch sugar manufacturers – CJ CheilJedang, Daesang, Samyang, and Sajo – potentially levying penalties totaling over 1 trillion won (approximately $730 million USD). The KFTC sent preliminary findings to the companies on March 6, 2026, initiating a process that could lead to significant fines and court-ordered price resets, mirroring recent actions taken against sugar and flour cartels. This marks a renewed effort by the KFTC to crack down on anti-competitive practices in essential food ingredient markets.

The Scale of the Allegations

The investigation centers on accusations that the four companies colluded to manipulate the prices of starch sugar – a key ingredient in a wide range of food products, from noodles and confectionery to industrial applications like paper and steel – for a period of seven years and six months, beginning in May 2018 and continuing until October 2024. The KFTC estimates that the total sales affected by this alleged collusion reached 6.2 trillion won (approximately $4.6 billion USD). The companies collectively control roughly 90% of the domestic B2B starch sugar market, giving them substantial influence over pricing. Starch sugar is derived from corn, encompassing both the powdered starch itself and glucose-based sweeteners like maltose, glucose, and high-fructose corn syrup.

How the Alleged Scheme Worked

According to the KFTC’s preliminary report, the four companies engaged in “repeated and organized” price fixing. While the specifics of the alleged collusion haven’t been publicly detailed, the KFTC’s investigation suggests a coordinated effort to maintain artificially high prices. The investigation, which spanned 142 days from October 2025 to early March 2026, has led the KFTC to classify the alleged behavior as a “very serious violation” of fair trade laws. The KFTC’s ‘simsa bogoseo’ (investigation report) functions similarly to an indictment in criminal court, outlining the specific details of the alleged wrongdoing and recommended penalties. The Chosun Ilbo reports that the KFTC is considering both price re-determination orders and substantial fines.

Impact on Businesses and Consumers

The implications of this investigation extend beyond the four companies directly involved. The starch sugar market is a critical link in the food supply chain, and inflated prices for this ingredient can translate into higher costs for food manufacturers, potentially passed on to consumers. While starch sugar is primarily sold through B2B channels, the impact is ultimately felt in the price of everyday goods like bread, snacks, and processed foods. The Korea Economic Daily notes that the KFTC is likewise considering referring the case to prosecutors for potential criminal charges against individuals involved.

The Broader Regulatory Context

This investigation is part of a broader trend of increased scrutiny by the KFTC towards price fixing in essential commodities. Recent actions against sugar and flour manufacturers demonstrate the commission’s commitment to tackling anti-competitive behavior that impacts consumers and the economy. The KFTC’s actions align with a global push to address supply chain vulnerabilities and ensure fair pricing in key markets. Illyo Shinmun highlights the KFTC’s determination to address the dominance of these four companies in the starch sugar market.

Potential Penalties and Next Steps

The KFTC’s investigation is now entering a formal review process, with a full committee hearing scheduled to determine the final penalties. The maximum potential fine for each company could reach 1.2 trillion won (approximately $885 million USD). In addition to financial penalties, the KFTC is considering ordering the companies to reset their pricing structures, potentially leading to lower prices for food manufacturers. The companies have the opportunity to respond to the KFTC’s findings and present their defense. The KFTC has already reportedly requested the prosecution of individuals within the four companies, and the prosecutor’s office has confirmed it has received the request.

What to Expect in the Coming Months

The KFTC’s full committee review is expected to conclude within the next few months. Following the review, the KFTC will issue a final decision, outlining the penalties and any required corrective actions. The companies may appeal the KFTC’s decision in court, potentially prolonging the process. The outcome of this investigation will likely set a precedent for future antitrust enforcement in the food ingredient sector and could encourage greater scrutiny of pricing practices across other essential commodities. The KFTC will also be closely monitoring the market to ensure compliance with any price re-determination orders and to prevent future instances of collusion.

The Hankyoreh reports that the case could lead to lower prices for popular products like bread and ice cream.