• Recent enforcement exposed massive cartels in sugar, flour, and paper markets
that inflated prices for vulnerable households.
• Existing administrative fines have failed as corporations internalize them as operating costs
while exploiting leniency programs.
• Proposed solutions include compulsory divestitures, lowering import barriers,
and AI-driven monitoring to foster natural market competition.
Amid a prolonged economic downturn marked by high interest rates and inflation, corporate collusion in essential consumer goods has emerged as a critical factor worsening household financial burdens. Large enterprises have secretly coordinated prices across critical raw materials and consumer goods markets—such as sugar, flour, starch sugar, and printing paper—prompting unprecedented enforcement crackdowns by the Korea Fair Trade Commission (KFTC). Collusion structurally distorts market competition, forcing high prices and limited choices on consumers, while dealing a severe economic blow to low-income and vulnerable households who spend a disproportionate share of their income on basic food and necessities. Despite the government’s widespread crackdowns and massive fines, an opportunistic perception persists within industries that profits from collusion far outweigh administrative penalties. Cartels have evolved from individual misconduct into highly structured survival strategies to avoid price competition and secure monopoly profits during economic crises. Thus, a fundamental structural overhaul of the market architecture and legal enforcement is urgently required.
Recent Enforcement Cases and Structural Factors
The first half of 2026 marked a massive regulatory crackdown on essential raw material cartels. In the business-to-business sugar market, CJ CheilJedang, Samyang, and Daehan Sugar colluded between 2021 and 2025 on a revenue base of 3.27 trillion KRW, drawing 408.3 billion KRW in fines. These firms artificially inflated consumer prices by up to 66.7% by immediately passing on raw material cost increases while delaying price cuts when costs fell. Similarly, six major flour mills faced executive indictments across a 5.99 trillion KRW market, and a starch sugar cartel operating on a 6.2 trillion KRW base faces potential fines of up to 1.24 trillion KRW. The printing paper sector also saw a historic 338.3 billion KRW fine levied against six manufacturers holding a 95% market share. To evade surveillance, executives systematically relied on periodic offline meetings and untraceable analog communications like public phones to orchestrate price shifts.
Economically, these commodity industries have a “cartel-friendly” structure where extreme product homogeneity and high fixed costs risk mutual ruin via price wars—the Bertrand paradox. To survive, oligopolies use collusion as a defensive strategy in an infinitely repeated game, monitoring rivals easily. Consequently, administrative fines fail because illicit profits outweigh penalties, leaving corporations to internalize sanctions as mere operating costs. This is worsened by inelastic demand for essential goods, allowing firms to effortlessly pass fine risks onto consumers. Furthermore, the leniency program is exploited as an arbitrage tool through rotational self-reporting, enabling dominant actors to evade punishment while cementing market control.
Paradigm Shift: Moving to Structural Remedies
Recognizing behavioral fixes act as temporary band-aids, the KFTC is pivoting toward structural remedies, announcing plans in May 2026 for compulsory corporate divestitures to sever collusive alignments. However, this proposal faces intense backlash from business sectors and scholars who argue that forcing asset sales without judicial trials violates private property rights and proportionality.
To break this stubborn cycle without relying solely on contentious divestitures, a multi-faceted structural strategy suggested by Professor Jinho JEONG (HSS) must be deployed to foster natural market competition. First, the government should lower import tariffs and relax regulatory barriers on suspect items to introduce external competitive pressure. Simultaneously, large distributors and buying groups must be empowered to enhance their countervailing power through private-label products and global sourcing, checking manufacturers’ pricing leverage. Legal accountability should also be internalized via corporate indemnity claims and executive criminal liability, while civil remedies like class-action lawsuits and punitive damages ensure illicit gains are fully disgorged. Finally, market surveillance must shift to AI-driven, real-time dynamic monitoring of costs, utilization rates, and pricing anomalies. Regulators, however, must remain vigilant against algorithmic collusion, where AI pricing systems achieve tacit coordination without explicit human interaction—marking the next critical frontier in antitrust enforcement.
