Binggrae Loses Final Appeal in 38.8 Billion Won Ice Cream Price-Fixing Fine Lawsuit

[Financial News] Binggrae filed a lawsuit claiming that the Korea Fair Trade Commission (KFTC)'s fine of 38.8 billion won for ice cream price-fixing was unjust, but ultimately lost in the Supreme Court of Korea.
According to legal sources on the 11th, the Supreme Court of Korea's second division, presided over by Eom Sang-pil, finalized the lower court's ruling against Binggrae on October 16 in the appeal regarding the cancellation of the imposed fine.
The KFTC found that Binggrae, Lotte Corporation, Lotte Confectionery, Lotte Wellfood, and Haitai Confectionery and Foods had colluded to fix prices, and in February 2022, imposed corrective orders and a total fine of 135 billion won.
The KFTC's investigation revealed that from February 2016 to October 2019, these companies agreed to set sales and supply prices for ice cream and to divide retail clients, and put these agreements into practice.
The collusion included prohibiting sales to each other's retail clients, capping support rates for retailers, reducing convenience store margins, and directly raising supply prices.
Among them, Binggrae, which was fined 38.8 billion won, filed a lawsuit against the decision in March of that year.
However, in March, the Seoul High Court dismissed the case, stating, "It is not unlawful to apply the 5% penalty rate (relative to relevant sales) on the grounds that the plaintiff's joint conduct constituted a 'serious violation.'"
The court noted, "The plaintiff and others held an 87.5% market share in the domestic ice cream market by sales, with no other effective competitors. The anti-competitive effects of their joint conduct on the market are by no means insignificant."
The court further stated, "Had the plaintiffs not engaged in joint conduct, increased price competition would likely have further eroded profitability, so it cannot be said that the unjust gains from this collusion were insignificant."
Binggrae argued that the KFTC's definition of the relevant market as 'the domestic market for small-volume, finished ice cream products' was unfair, insisting that the market should be distinguished based on distribution channels (retail and wholesale).
However, the court rejected this, stating that such differences in distribution channels are an issue from the supplier's perspective, and "do not appear to be decisive factors for consumers that override price or preference."
Binggrae also claimed that sales from contracts signed before the agreement or sales resulting from breaches of the agreement should be excluded from the relevant sales, but this was not accepted.
The court explained, "The fine guidelines define the 'date of agreement' as the start date of the violation, regardless of when the conduct began. Unfair collusion is established by agreeing to restrict competition, and does not require actual implementation of the agreement."
The Supreme Court of Korea reached the same conclusion, stating, "There was no error in the lower court's judgment that would constitute a violation of logical or empirical rules, nor did it exceed the bounds of free evaluation of evidence." The appeal was dismissed.


jisseo@fnnews.com Seo Min-ji Reporter