Court decision looming in Cargill dispute with South Korean trade watchdog

By Jane Byrne

- Last updated on GMT

© istock/PeterHermesFurian
© istock/PeterHermesFurian

Related tags South korea

A ruling in the appeal process initiated by Cargill against claims it participated in a feed cartel in South Korea is due this autumn.

In October 2015, the US agribusiness giant formally challenged the findings of South Korea’s competition authority that it was part of a feed price-rigging group over a number of years. 

“The process is still ongoing. We expect the Seoul High Court to issue a decision in our case sometime in the fall [autumn] of 2017,”​ a spokesperson for Cargill told us yesterday.

Background to appeal  

Cargill is seeking to revoke a Korea Fair Trade Commission (KFTC) administrative ruling that it violated that country's Monopoly Regulation and Fair Trade Act.

July 2015 saw the KFTC levy fines totaling US$68.7m 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. 

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 over the unfair trade practices. 

Cargill said it has consistently maintained that 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 Korean animal feed customers were not harmed.

“We trust that we will get a fair hearing in the Korean courts,”​ said the Minnesota based company in November 2015, adding that it believed the facts of the case clearly demonstrate it made its pricing decisions independently based on prevailing market conditions. 

Cargill feed production capacity in South Korea   

Cargill first entered South Korea in 1956 and set up its first feed mill there in 1969. It subsequently acquired Agribrands Purina Korea in 2001.

Cargill Agra Purina currently operates four mills in the Asian country, with capacity of up to 2m metric tons of livestock feed annually.

In November 2015, Cargill’s largest livestock feed mill in the world went online in South Korea. The nearly 53,000-square-meter feed mill, built for around US $100m, produces poultry, ruminant, swine and pet food products. It has annual capacity of 870,000 mt per year.

As that facility went on stream, Dr Bokyeun Lee, president of Cargill Agri Purina and representative of Cargill in Korea, noted the long-term forecast for Korea’s domestic feed market was for it to reach 15 to 16m mt annually, to make it the world’s ninth largest commercial feed market.

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