CJ CheilJedang, Samyang executives get suspended prison terms in $3B sugar price-fixing case

A Seoul court on Wednesday convicted current and former executives and employees of CJ CheilJedang and Samyang of fixing sugar prices in a case prosecutors valued at about 3 trillion won. A judge handed suspended prison terms to top executives and fined each company 200 million won.

Judge Ryu Ji-mi of the Seoul Central District Court sentenced Kim, a former CJ CheilJedang Food Korea chief, and Choi, a former Samyang CEO, to 2 1/2 years in prison, suspended for three years, and fined each 100 million won for violating the Fair Trade Act.

Nine other employees from the two companies also received suspended prison terms and fines. Under joint-penalty provisions, the court fined CJ CheilJedang and Samyang 200 million won each.

"Based on the defendants’ confessions and corroborating evidence, guilt is recognized," the court said, adding that the conduct "undermined the basic purpose of the law and distorted market order." The judge said that even when collusion occurs in business-to-business transactions, "the ultimate harm can be passed on to consumers" and should not be treated lightly.

The court also noted that the companies had previously been investigated by the Fair Trade Commission in a flour price-fixing case and had received relief or reduced penalties through a leniency program, yet similar conduct was repeated.

Still, the judge said it was difficult to conclude the companies reaped excessive profits, citing the public nature of international raw sugar prices, the bargaining power of large buyers and price trends for raw sugar. The court also considered that the defendants admitted wrongdoing and expressed remorse, and that some responsible parties had been detained for more than five months.

Prosecutors said the defendants agreed in advance on the timing and size of sugar price increases from February 2021 to April last year, limiting competition. Prosecutors put the value of the collusion at about 3.2715 trillion won.

Investigators said the companies quickly reflected increases in raw sugar costs in product prices, but limited price cuts when raw sugar prices fell. During the period, sugar prices rose as much as 66.7%, and even after raw sugar prices declined, prices remained about 55.6% higher than before the collusion.

At closing arguments, prosecutors sought three years in prison and a 100 million won fine for Kim, and 2 1/2 years in prison and a 70 million won fine for Choi.