FTC launches massive probe into price fixing

By Kang Seung-woo

The nation’s antitrust agency launched its largest probe into price fixing and inflation-triggering Monday.

Critics say the Fair Trade Commission’s (FTC) move does not match its primary goal of controlling order in the market, calling it ridiculous and anti-market.

The FTC decision came after its new Chairman Kim Dong-soo made price monitoring a top priority in line with the government’s action to stabilize prices, heeding President Lee Myung-bak’s call to fight inflation.

Kim, who served as CEO of the Export-Import Bank of Korea and a vice finance minister, has created a task force by combining the FTC’s market monitoring, cartel investigation and consumer policy divisions to look at consumer items exhibiting unstable prices.

“As price stability has emerged as a national issue, the FTC launched a large-scale investigation in order to actively cope with inappropriate price hikes and other price-rigging activities ahead of the holiday,” a source close to the matter said.

“This probe will be the largest ever since the FTC was established. The number of items and companies subject to the investigation will also be the largest ever,” he added.

Consumer prices rose 2.9 percent last year, but fresh food prices jumped 21.3 percent from the previous year. The producer price index (PPI) rose to a two-year high of 5.3 percent last month from the previous year.

Earlier, the finance ministry said it will step up price monitoring of 22 items, including agriculture, fishery and livestock products to keep inflation in check. It will also come up with more sweeping price stabilization measures on Thursday.

The FTC did not specify which items and companies will be investigated, but an official of the organization said the 22 items announced by the government will also be under its scrutiny.

However, the FTC’s all-out efforts to rein in inflation have drawn criticism given that the government body’s main goal is creating a competitive market environment by reforming anti-competitive regulations.

“The FTC was established to protect consumer rights, secure a competitive environment for small- and medium-sized companies, restrain the concentration of economic power and create a competitive market environment,” said a Seoul-based economist.

“But the FTC’s move to micro-manage prices will not be a success.”

“The best way to bring rising prices under control is a hike interest rates, but the government appears to hesitate to opt for that because it could further strengthen the Korean won against the U.S. dollar, which will prevent economic growth from reaching 5 percent this year.”