Cargill disagrees with South Korean feed cartel ruling

By Jane Byrne contact

- Last updated on GMT

Cargill disagrees with South Korean feed cartel ruling

Related tags: South korea

Cargill may challenge the ruling of South Korea’s competition authority that claims the company was part of an animal feed price rigging cartel over a number of years. 

It said it was reviewing next steps in the process, including whether to contest the decision in the Korean courts.

South Korea's Fair Trade Commission (KFTC) levied fines totaling US$68.7 million at Cargill Agra Purina and 10 other feed companies including CJ Cheijedang and Jeil Holdings over what it alleged was their collusion on pig, cattle and poultry feed prices. 

A spokesperson for Cargill told FeedNavigator today the Seoul High Court has to accept an appeal: "It’s not like the US Supreme Court that gets to decide what appeals it will take. So, if any of the respondents decide to appeal the decision, there would be an appeal process. We need to see the written decision before we decide whether to appeal."

The 11 feed companies fined control 43% of the South Korean market with the KFTC contending they took part in a cartel to control feed prices between October 2006 and November 2010, to the detriment of livestock producers’ profit margins.

The South Korean trade watchdog said domestic feed price jumped 60% during those years.

Harim Holdings and Farmsco were among the other feed firms fined.

Cargill said the case, which is nearly five years old, centers on industry meetings and social gatherings attended by certain employees during 2006 to 2010 at which pricing became a topic of discussion.

It insisted there was never an agreement between it and its competitors to coordinate prices in Korea’s highly competitive and fragmented animal feed market, and that its feed customers there were not harmed.

“We further maintain that pricing decisions were driven by raw ingredient costs, formulation of products, and customer volume, not competitor communications,”​ said Cargill.

Feed prices study

The US firm also argued that economic analysis demonstrated there was no effect on pricing from the conduct that is the subject of the KFTC decision.

“Dr Seong-Hoon Jeon, professor of economics at Sogang University in 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 demonstrated there was no statistically significant difference between Cargill’s actual or list prices during the period the KFTC challenged and the nearly five years thereafter,”​ said the US group.

However, Sarena Lin, president, Cargill Feed and Nutrition, did acknowledge that it was inappropriate for Cargill staff 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. We cannot allow even the appearance of impropriety,”​ she said.

Cargill is conducting additional training for its employees to “reinforce learnings from this situation.”

It said it developed a policy in 2010 to provide oversight and guidance for its Korean feed business employees attending industry meetings with competitors and that it also worked with the Korea Feed Association to develop the industry’s first ever antitrust compliance policy adopted by members in May 2013.

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