Six firms indicted in W1.2tr samgyeopsal price-fixing scheme

Nine meat distribution companies that colluded to fix the wholesale price of samgyeopsal — pork belly, one of South Korea's most popular everyday foods — have been referred to trial following a prosecution investigation. Sales staff at the firms coordinated through Telegram group chats and other channels to align the prices they submitted to a major hypermarket chain. Prosecutors believe the collusion drove pork retail prices up by roughly 20 percent.

Lee Jeong-ho, chief prosecutor of the sixth criminal division at the Seoul Eastern District Prosecutors Office, told a briefing at the office in Songpa-gu on Tuesday that prosecutors had indicted six pork distribution companies and 12 of their executives and employees on charges of violating the Fair Trade Act.

Nine large pork distributors, including Dodram Food, colluded from August 2017 through November 2023 to fix the prices at which they supplied E-mart, prosecutors said. The companies agreed in advance on their individual bid prices and exchanged the quotes they planned to submit to E-mart, keeping supply prices artificially elevated. Three of the nine firms avoided indictment — either because they had shut down or because they cooperated actively with a Korea Fair Trade Commission probe.

Lee said the total value of transactions covered by the collusion reached 1.2 trillion won ($839 million). He added that pork prices at major hypermarkets fell more than 20 percent year-on-year in 2024 after the scheme was uncovered — evidence, he said, that consumers had been bearing the cost of artificially inflated prices.

E-mart had stopped disclosing individual suppliers' bid prices from around August 2017, intending to encourage genuine price competition and keep consumer prices as low as possible. The meat suppliers, however, were secretly coordinating among themselves behind the scenes.

Chat records released by prosecutors included messages hinting at the sharing of price information, such as one that read: "Manager, would you be able to share the regular-cut prices with us starting this week? Ours are from last time anyway, so I'll send them over."

Through these exchanges, the companies agreed on the range of pork bid prices they would submit to E-mart. In one exchange made public by prosecutors, Company A proposed setting samgyeopsal at 18,000 won and pork neck at no less than 14,000 won per kilogram. The other firms agreed, and actual submitted bids clustered between 17,500 won and 18,000 won.

Initially the coordination took place mainly through individual employees communicating privately, but from late 2021 the group grew bolder and set up a Telegram group chat to share price information, market trends and supply prices on an ongoing basis. Once the network was established, the collusive practices were handed down to successors at each company, and newly entering suppliers were also drawn into the scheme.

The firms also face charges of destroying evidence. When the Fair Trade Commission conducted an on-site inspection in November 2023, the companies deleted chat records of their collusion discussions and internal documents listing competitors' prices, obstructing the investigation. The administrator of the group chat used a "delete group" function to wipe the entire contents of the channel.

Prosecutors also released a phone call in which a legal affairs employee at one of the firms urged a sales team leader to delete any KakaoTalk or Telegram messages that mentioned volumes, inventory or the timing of price increases.

Prosecutors said they intend to continue taking an active, principled stance against all fair-trade violations that distort competition and undermine the national economy.

"We will do everything in our power to secure a conviction in this case and stamp out collusion that causes serious harm to ordinary people's livelihoods," a prosecution official said. "We will continue to respond strictly to those who played a leading role in the conspiracy and obstructed the Fair Trade Commission's investigation."