July 15, 2015

 

Cargill denies unfair trade practices in South Korea

 

 


Cargill has voiced its disappointment over a recent ruling by the Korea Fair Trade Commission's (KFTC) regarding unfair trade practices allegedly committed by the company.

 

Cargill maintains that there was never an agreement with competitors to coordinate prices in South Korea's highly competitive and fragmented animal feed market, and that its Korean animal feed customers were not adversely affected. The company further maintains that pricing decisions were driven by raw ingredient costs, formulation of products and customer volume. Competitor communications was never a factor, Cargill insisted.

 

Because each contract is unique, pricing for each customer is unique, the company added.

 

Cargill is carefully reviewing future steps in the process, including a possible appeal against KFTC's decision in the Korean courts.

 

The case, which lasted for close to five years and involves only the company's feed business in South Korea, paid specific attention to industry meetings and social gatherings attended by certain employees during 2006 to 2010 at which pricing became a topic of discussion.

 

According to Cargill, economic analysis demonstrates that there was no effect on pricing from the conduct of those meetings. Dr. Seong-Hoon Jeon, the professor of economics at Sogang University in South Korea, provided a 75-page econometric analysis to the KFTC that concluded that the economic evidence was inconsistent with cartel behavior.

 

Dr. Jeon's report showed that there was no statistically significant difference between Cargill's actual or list prices during the period challenged by the KFTC, and nearly five years thereafter.

 

"We take this matter very seriously," said Sarena Lin, the president of Cargill Feed and Nutrition. "While we do not believe there were any agreements made on pricing or that our customers were harmed in any way, we acknowledge that it was inappropriate for our employees to remain in meetings where pricing was being discussed. This behavior is a violation of our internal Guiding Principles and compliance policies, and is not tolerated."

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