[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 sugar price-fixing scheme involving CJ CheilJedang, Samyang Corporation, and Daehan Sugar was carried out after discussions reached the level of CEOs and top executives. During the collusion process, the three sugar companies discussed negotiation methods regarding their main client, Lotte Chilsung Beverage, and shared Lotte's responses as they proceeded with the sugar price increases. In effect, the three sugar companies colluded to deceive clients such as Lotte Chilsung Beverage and reap excessive profits.

According to the prosecution's indictment against the three sugar companies on December 5, the initial discussion on sugar price-fixing 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, and Jeon, head of sales (PU) at Samyang Corporation, along with other executive-level officials from the sugar companies, gathered to discuss the rising cost of raw sugar and exchange rates, agreeing on the need to raise sugar sales prices.

On April 1 of the same year, they agreed to raise prices by 40 won per kilogram around May 2021. According to the indictment, team leaders held separate meetings and phone calls to discuss negotiation strategies for major clients, including Lotte Chilsung Beverage, shared responses, and executed the agreement.

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

This pattern was repeated in the second half of 2021. After another executive-level meeting on June 18, 2021, the companies ultimately aligned on an 80 won per kilogram price increase around September 2021, coordinating the timing and scale. The indictment states that team leaders shared negotiation strategies by client and executed the plan, with the results reported upward for approval.

Notably, the CEOs and top executives of the three sugar companies met directly to form a consensus that "sugar prices must be raised quickly," and even discussed a negotiation strategy to notify their main client, Lotte Chilsung Beverage, first to "set the tone."

This "top-level meeting" was formalized on January 13, 2022, at a restaurant in Cheongdam-dong, Gangnam-gu, Seoul. At this meeting, former CEO Choi of Samyang Corporation and former senior executive Kim, who oversaw Korean food at CJ CheilJedang, discussed the need to "raise sugar prices quickly to improve operating profit due to soaring raw material costs" and that "to raise sugar prices, it is necessary to notify major end-users such as Lotte Chilsung Beverage to set the mood," 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-CEO Choi of Samyang Corporation instructed, "We must go all out and do our best to raise prices," and "since customers are not at all prepared to accept additional price increases, we must be thoroughly prepared." These instructions were shared via email. The indictment also details an executive-level meeting in July, communications in August indicating that "if Samyang Corporation starts the (price increase) process first, CJ CheilJedang will follow suit," and team leaders executing negotiations by client in October.

The prosecution determined that collusion occurred not only when raising but also when lowering sugar prices. Amid government requests and client demands, including from Lotte Chilsung Beverage, to lower sugar prices last year, 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 reduction, implementing a 50 won per kilogram decrease on July 1 last year. When the sugar price reduction was delayed, Lotte Chilsung Beverage raised prices on six beverage products by 6.9% in June last year.

Furthermore, when Lotte Chilsung Beverage requested a 50 won per kilogram sugar price reduction in April this year, citing exchange rate and customs price trends, and even mentioned the possibility of a "tender" if there was no cooperation, CJ CheilJedang and Samyang Corporation discussed a joint response and agreed to a 30 won per kilogram reduction exclusively for Lotte Chilsung Beverage, which was then implemented. This sequence is also included in the indictment.

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