Kyochon Chicken loses W50m defamation suit over 'no-communication price hike' coverage

Kyochon Chicken's parent company filed a defamation lawsuit against a financial news outlet over articles saying the chain was facing consumer backlash due to price hikes with no communication — and lost.

The Seoul Southern District Court's Civil Division 15, presided over by Judge Yoon Chan-young, ruled against Kyochon Food & Beverage in May in a 50 million won ($32,500) damages suit the company had brought against the outlet, alleging that false statements had damaged its reputation and creditworthiness. The court also dismissed Kyochon's request for a correction and ordered the company to bear the litigation costs.

The outlet published a four-part investigative series titled "Kyochon in Crisis" in May 2024. The articles analyzed how Kyochon Chicken had fallen from first to third place in the industry, citing price increases, owner risk, a consumer boycott and the failure of new business ventures as contributing factors.

Kyochon responded in June 2024 by filing a lawsuit against the outlet's corporate entity, editor and reporter, seeking 50 million won in damages. During the trial, the company argued that nine specific statements in the articles were false.

The most prominent target was a passage stating that "Kyochon Chicken's prices are not significantly different from those of other brands, but it is facing the strongest consumer price resistance due to price hikes with no communication and poor timing." Kyochon argued in court that the claim it had raised prices unilaterally without communication was false.

The court rejected all of Kyochon's arguments.

The court acknowledged that Kyochon appeared to have raised prices after consulting with its franchisee council, but said the outlet appeared to have been reporting the public perception that consumers were dissatisfied with the price increases.

The court added that the articles appeared intended to highlight problems in how the company communicated with consumers during the process. "Based solely on the evidence submitted by Kyochon, it is difficult to conclude that the company raised prices through sufficient communication with the market or consumers," the court said, finding the passage could not be considered false.

Kyochon also argued that phrases such as "a boycott triggered by owner risk" and "new businesses have failed" were false, but the court rejected those claims as well.

The court said those expressions were "sufficiently open to interpretation as evaluations or expressions of opinion rather than statements of fact."

On the owner risk claim, the court said it was reasonable to view misconduct by the founding family as a potential cause of a boycott, and that it was difficult to conclude Kyochon's owner risk had no negative impact on business earnings.

On the "new business failure" claim, the court said that even if the wording was somewhat exaggerated, "the important parts appear to conform to the truth when viewed in overall context," and it could not be considered a false statement of fact.

Taking all of these points together, the court dismissed the suit, ruling that "all of Kyochon's claims are without merit."

The ruling was finalized June 2. Kyochon did not appeal the first-instance decision.