[Exclusive] "Let's Raise It Quickly": Executive-Level Plot at Cheongdam Restaurant... Three Sugar Giants in 3 Trillion Won Price-Fixing Scandal

Collusion Structure Among Three Sugar Companies Revealed in Indictment
Direct Involvement of CEOs and Executives
Negotiation Strategies Coordinated and Responses Shared
Agreements Made on Both Price Hikes and Cuts
Clients Deceived for

The 3 trillion won-scale sugar price-fixing scheme involving CJ CheilJedang, Samyang Corporation, and Daehan Sugar was found to have been discussed at the level of their CEOs and top executives before being carried out. During the collusion process, the three sugar companies discussed negotiation strategies with their main client, Lotte Chilsung Beverage, and shared Lotte's responses as they proceeded with the sugar price hike. In effect, the three sugar companies colluded to deceive Lotte Chilsung Beverage and other clients, reaping excessive profits.

According to the prosecution's indictment against the three sugar companies on December 5, the first discussion on sugar price collusion began around February 2021 at a restaurant in Gangnam-gu, Seoul. At the time, Song, head of the B2B food ingredients division at CJ CheilJedang, Jeon, sales executive (PU head) at Samyang Corporation, and other executive-level officials from the sugar companies met and, citing rising raw sugar prices and exchange rates, agreed on the need to raise sugar sales prices.

On April 1 of the same year, they agreed to a "40 won/kg increase around May 2021." According to the indictment, team leaders held separate meetings and phone calls to discuss negotiation methods for each major client, including Lotte Chilsung Beverage, shared responses, and implemented the agreement.

The prosecution believes the collusion followed a sequential scheme: "executive-level agreement → team leader execution → upward reporting and approval."

The same pattern was repeated in the second half of 2021. After an executive-level meeting on June 18, 2021, the companies ultimately aligned on an "80 won/kg increase around September 2021," coordinating the timing and scale of the price hike. Team leaders then shared negotiation strategies by client and executed the plan, as detailed in the indictment. The prosecution believes that team leaders reported negotiation progress to their superiors, who would approve and continue the collusion.

Notably, the CEOs and top executives of the three sugar companies met directly and agreed that "the sugar price needs to be raised quickly," and discussed the strategy of notifying their main client, Lotte Chilsung Beverage, first to "set the tone" for the price hike.

This "high-level meeting" was concretized on January 13, 2022, at a restaurant in Cheongdam-dong, Gangnam-gu, Seoul. At the meeting, former Samyang Corporation CEO Choi and a former high-ranking executive Kim, who was in charge of Korean food at CJ CheilJedang, discussed that "raw material costs have risen too much, so to improve operating profit, the sugar price needs to be raised quickly," and that "to raise the sugar price, we need to notify major end-users like Lotte Chilsung Beverage first to set the tone," according to the investigation.

The collusion discussions among the three sugar companies continued into the second half of 2022. At a profit and loss review meeting on April 18, 2022, then-Samyang Corporation CEO Choi instructed, "We must go all out and do our best to raise prices," and "since customers are not at all ready to accept further price hikes, we must be fully prepared." This directive was shared via email. The indictment also details an executive-level meeting in July, evidence that "if Samyang Corporation starts the (price hike) process first, CJ CheilJedang will follow suit" in August, and team leaders' execution of client-by-client negotiations in October.

The prosecution also found that collusion occurred not only during price increases but also during price decreases. Last year, amid government requests to lower sugar prices and demands from clients like Lotte Chilsung Beverage, the three sugar companies reached an executive-level agreement to "hold out and not lower prices." After the agreement, they jointly decided on the timing and scale of the price cut, implementing a 50 won/kg reduction on July 1 last year. When the sugar price cut was delayed, Lotte Chilsung Beverage raised the prices of six beverage products by 6.9% in June last year.

Furthermore, when Lotte Chilsung Beverage requested a 50 won/kg sugar price reduction in April this year, citing trends in exchange rates and customs clearance prices, and pressured the companies by mentioning the possibility of "going to tender" if they did not cooperate, CJ CheilJedang and Samyang Corporation discussed a joint response and agreed to a 30 won/kg reduction exclusively for Lotte Chilsung Beverage, which was then implemented. This is also included in the indictment.

The prosecution concluded that, through these methods, the three sugar companies prearranged the timing, scale, and occurrence of sugar price changes from February 2021 to April this year, engaging in price-fixing worth 3.2715 trillion won. Last month, the prosecution indicted Choi, Kim, the corporate entities of Samyang Corporation and CJ CheilJedang, and their employees for violating the Fair Trade Act.