'10 Trillion-Won Starch and Sweetener Cartel': Four Companies Pursue Separate Defense Strategies—Daesang Denies Charges, While CJ and Sajo Plead for Leniency

[Financial News] As the trial over alleged price fixing involving starch and sweetener products worth 10 trillion won gets underway, the indicted food ingredient giants are taking different approaches. Samyang, one of the “top three companies” identified by prosecutors as the ringleaders of the cartel, received leniency under the voluntary reporting program and is awaiting the trial’s outcome. Daesang has challenged the credibility of Samyang’s statements, which form a key basis of the alleged cartel, while also arguing that prosecutors have failed to substantiate their case. Sajo CPK, which acknowledged most of the evidence, signaled that it would dispute the timing of some of the alleged offenses. CJ argued that its impact on competition was limited and appealed for leniency.
On the 6th, Judge Lee Ho-seon of the Seoul Central District Court’s Criminal Division 3 held the second preparatory hearing for 25 defendants, including the three corporations Daesang, Sajo CPK and CJ CheilJedang; current and former employees of each company; and Myeong Hyeong-seop, chairman of the Korea Starch and Sweetener Association. They were indicted on charges of violating the Monopoly Regulation and Fair Trade Act.
Daesang’s attorneys mounted a focused challenge to the charges through a presentation. One attorney pointed out, "The evidentiary record remained the same from the investigation through the indictment, but the prosecution’s theory was completely reversed," adding, "When prosecutors initially sought arrest warrants, they claimed that an agreement had been reached at meetings of company heads and that instructions were then passed down to working-level employees—a 'top-down structure.' However, after both the first and second warrant applications were rejected, they changed their theory to a 'bottom-up structure,' claiming that working-level employees had colluded first and reported to their superiors."
The defense also stressed that the “company heads’ meetings” cited by prosecutors had little connection to Daesang. It noted that the number of such meetings cited by the prosecution changed each time it sought a warrant, and that prosecutors ultimately failed to specify when or where the meetings took place. The defense attorney said, "Once the representative’s alibi became clear, prosecutors abandoned specifying the dates and locations in the indictment and instead described them broadly, infringing on the defendant’s right to prepare a defense."
Daesang’s corporate structure, which separates its food and materials divisions, was also presented as a reason why collusion by company heads would have been difficult. The defense argued that because starch and sweetener prices were decided solely by the head of the sales division, it would have been difficult for the company head to intervene in setting prices in the field in real time.
Prosecutors countered, "The exact number of company-head meetings, or whether a particular representative attended a specific meeting, is not itself an element of the crime. The essential question is whether the representatives were aware of the cartel and nevertheless tolerated or endorsed the collusion carried out at the working level." They added, "Although the meetings took place long ago and there are some shortcomings in specifying them, the statements by representatives of the other companies have been consistent. We will establish their credibility through witness examinations in court."
CJ CheilJedang, which admitted to participating in the cartel, strongly emphasized the limited nature of its involvement. Its attorney said, "Since entering the market in 2011, CJ CheilJedang has been the fourth-largest operator, with a market share of about 13 percent. Its facilities have consistently operated at 90 to 95 percent capacity, leaving it with no room to independently expand supply or determine prices." The attorney added, "It merely accepted after the fact the market prices established under the leadership of the top three companies—Daesang, Samyang and Sajo CPK—and its impact on competition was also minimal."
The defense argued that, regardless of whether CJ CheilJedang participated in the cartel, the market prices observed externally moved in line with those set by the top three companies.
The court will hold another hearing on December 8 and begin full-scale examinations of witnesses from Samyang requested by prosecutors. It separated the proceedings involving defendants from Sajo CPK and CJ CheilJedang, who agreed to all the evidence and admitted the charges.
Prosecutors allege that Daesang, Samyang, Sajo CPK and CJ CheilJedang jointly agreed on the prices and transaction terms for starch and sweetener products from July 2017 through October 2025. In April, they indicted the three corporations and current and former employees on allegations of a cartel worth approximately 10.152 trillion won. The case is the largest food-sector cartel ever prosecuted in South Korea. Investigators found that starch prices rose by as much as 73.4 percent and sweetener prices by as much as 63.8 percent compared with pre-cartel levels.
[email protected] Lee Chang-hoon Reporter