Consumers Fall Prey to Unfair Business Practices

It goes without saying that fair competition is the backbone of a free-market economy. Entrepreneurs are able to pursue profit through their business operations in a free and fair way. However, some businesspeople have often formed a cartel, fixed prices or engaged in other unfair practices in a bid to maximize their profit. South Korea is now the world's 15th-largest economy, but its corporations are still involved in unfair or illegal practices. That's why the nation's antitrust regulator is stepping up its fight against those undermining fair competition.

On Wednesday, the Fair Trade Commission (FTC) tentatively decided to impose a 226.3-billion-won ($196.1 million) fine on 11 manufacturers of soju, the nation's popular liquor, for price fixing. The FTC said the distillers have colluded to raise soju prices since 2006. Jinro, the largest soju maker in Korea, was slapped with the biggest penalty of 116.2 billion won, followed by Doosan (24.6 billion won), Daesun (20.6 billion won) and Kumbokju (17.2 billion won). They are lodging strong complaints over the fine. The commission is scheduled to finalize the penalty next month after reviewing explanations from the companies.

For now, it is unlikely that any of the violators will be cleared of the penalty although there is room to readjust the amount of the fine. The FTC said it has secured sufficient evidence proving the distillers' collaboration in fixing their prices. In fact, the soju makers have hiked their prices at the same time and by the same margin over the past years, thus raising suspicions that they have formed a price cartel. The companies cannot avoid criticism that they have fattened their own pockets at the sacrifice of consumers. It is really regrettable that the domestic firms are still trying to make money using fraudulent methods.

The action against the liquor makers came after the FTC on Nov. 3 ordered four beverage suppliers ― Lotte Chilsung, Coca Cola Korea, Haitai and Dongah Otsuka ― to pay a combined fine of 940 million won for blocking discount stores from lowering retail prices of their products below the fixed levels. The companies were also slapped with a 24-billion-won fine for similar reasons in August. This shows that they have systematically manipulated prices, not through market forces but illegal collaboration. Such unfair practices do not stop here.

Suppliers of fuels, flour, medicines and health care are also suspected of fixing prices. And universities, cram schools and air cargo service providers face allegations about rigging their rates. More surprising is that the FTC is considering imposing a combined fine of up to 1 trillion won on six suppliers of liquefied petroleum gas (LPG) for price fixing allegations. In addition, there are allegations that 15 major construction firms have colluded in the bidding for the government's four-river refurbishment project which will require more than 22 trillion won until 2012.

We urge the FTC to make thorough investigations into those companies that have allegedly engaged in anti-competition activities. The regulator should take tougher punitive action against violators in a move to root out unfair or illegal practices. The nation can never guarantee a market economy unless businesses play a fair game.