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Five Beverage Makers Fined for Price Fixing

Posted August. 17, 2009 08:12,   


The Fair Trade Commission yesterday fined major domestic beverage makers for price fixing and reported two CEOs for criminal prosecution.

The investigation into price fixing of the distilled liquor soju, mobile phone fees, movie tickets and liquefied petroleum gas is expected to have substantial consequences on the companies in question.

The commission said it ordered five beverage companies to make corrections -- Lotte Chilsung Beverage, Haitai Beverage, Woongjin Foods, Coca-Cola and Donga Otsuka -- that raised prices twice through price fixing.

Lotte (21.7 billion won or 17.5 million US dollars), Haitai (2.3 billion won or 1.8 million dollars) and Woongjin (1.4 billion won or 1.1 million dollars) were fined a combined 25.4 billion won (20.5 million dollars). Coca-Cola and Donga Otsuka were exempt from fines for voluntarily reporting the offense.

The commission also took unprecedented action against Lotte and Haitai, which reportedly led the price fixing scheme, by reporting the companies and CEOs to prosecutors on the charge of violating fair trade law.

According to the commission, the five companies at the end of 2007 agreed to “raise the price of their products a month after industry leader Lotte lifted its prices.” They are charged with raising the prices of 72 fruit juice products ten percent and those of 89 soft drink products five percent in February and March last year.

A commission official said, “We raised the level of sanctions against these companies since beverages are closely related to the cost of living, and they ignored the government’s request to cooperate in stabilizing prices.”

The government watchdog has strengthened its supervision on manufacturers of products for daily use, based on the recognition that such companies can unfairly raise the prices of products using the recent economic recovery and rise in commodity prices as an excuse.

Onsite investigations on price collusion were made at the country’s three major mobile phone operators in April, and action is expected once the charges are confirmed.

Probes have been completed for soju manufacturers that unilaterally raised prices late last year and early this year, with discussion underway on the level of sanctions.

The commission has investigated movie theaters that raised ticket prices in late June and early last month, and is expected to conclude discussion on alleged price fixing by liquefied petroleum gas companies.

A leading commission official said, “It is government policy to take more stringent action against price fixing on products that can affect cost of living and the people’s livelihood.”