Cargill to appeal feed cartel claims in Korean court

By Jane Byrne contact

- Last updated on GMT

Cargill to appeal feed cartel claims in Korean court
Cargill has filed an appeal in the Seoul High Court over claims it took part in an animal feed price fixing cartel in Korea.

The US company, trading as Cargill Agri Purina Inc in Korea, is seeking to revoke a Korea Fair Trade Commission (KFTC) administrative ruling that it violated that country's Monopoly Regulation and Fair Trade Act.

A Cargill representative told FeedNavigator previously that 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.”

The KFTC alleged that Cargill and ten of its competitors collectively decided and implemented prices for domestic Korean feed products from 2006 to 2010.

In a statement sent to this publication, the agribusiness giant said it “has consistently maintained that there was never an agreement between Cargill and its competitors to coordinate prices in Korea’s highly competitive and fragmented animal feed market, and that its Korean animal feed customers were not harmed.” 

Cargill said it believes the facts of the case clearly demonstrate it made its pricing decisions independently based on prevailing market conditions. “We trust that we will get a fair hearing in the Korean courts,”​ said the Minnesota based company.

Fines levied

In July, the KFTC levied fines totaling US$68.7m at Cargill Agra Purina and 10 other feed firms including CJ Harim Holdings and Farmsco.

The Commission alleged the companies had had a meeting named ‘Samokhoe’ for the purpose of discussing and sharing their opinions on prices concerning their joint purchase of feed ingredients from Korea’s National Agricultural Cooperative Federation (Nonghyup) or from sources related to Nonghyup.

The authority claimed: “The cartelists collectively purchase raw materials from Nonghyup, and this has resulted in them sharing a similar business environment. Most of them were a member of Korea Feed Association and many were from the same university or had worked at the same company before. These circumstances had led them to discuss and agree on prices.”

Econometric analysis

But Cargill 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.

New feed mill

Meanwhile, this week saw Cargill open its new Agri Purina feed mill plant in Pyeongtaek in Korea – with a capacity of 870,000 tons, this facility is Cargill’s largest animal feed plant in the world.

The nearly 52,610㎡ facility will produce poultry, ruminant, swine and pet food products under the Purina and Nutrena brands.   

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1 comment

Justice

Posted by Phillip M. Dixon,

I'm pleased to see that an appeal is being made, using data that demonstrates the complexity of the process that goes into pricing. There should be far more than circumstantial evidence brought to light before fines are handed out for millions of dollars.
Hopefully a fair trial will take place and clear up which parties were or were not involved in antitrust law violations.

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