When administrative authority crosses the line

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When administrative authority crosses the line

Published: 27 Feb. 2026, 00:02

Audio report: written by reporters, read by AI

Park Su-ryon

The author is the deputy editor of Content Division Three and the head of corporate research at the JoongAng Ilbo.

President Lee Jae Myung has been paying close attention not only to housing prices but also to consumer prices. On social media, he has scrutinized items that weigh heavily on household budgets — including sanitary pads, sugar, flour and school uniforms — and suggested instances of possible collusion.

The Fair Trade Commission (FTC) has quickly answered the president’s call to mobilize administrative authority. This month alone, it announced the investigation results of two suspected cases of collusion involving sugar and flour.

President Lee Jae Myung speaks during the sixth Cabinet meeting at the Sejong Room of the main building of the Blue House in Seoul on Feb. 24. [JOINT PRESS CORPS]

As the president noted, collusion is a serious threat to a market economy. While the immediate damage from price-fixing by sugar refiners or flour millers falls on businesses such as bakeries and beverage makers, customers bear the ultimate burden, having to pay more for or give up purchases altogether.

But consumers currently have no direct avenue to request compensation. Instead, the FTC can impose surcharges of up to 20 percent of relevant sales. Emphasizing policy effectiveness and public accountability, Lee has urged the commission to take stronger action, including the use of “price redetermination orders,” a measure that has not been used in two decades due to strict conditions and voluntary price cuts by companies during investigations.

Under existing FTC guidelines, companies subject to such an order must submit new price plans to the government themselves. The intent is to demonstrate corrective action through price adjustments. However, there is no rule specifying how much prices should be lowered.

The reason is simple. In a market economy, the government does not set prices. Even firms found guilty of collusion are expected to determine their own prices after corrective measures.

The administration is now considering revising the guidelines to allow more explicit intervention. At a televised Cabinet meeting on Tuesday, Lee said authorities should not simply urge companies to cooperate but should order them to lower prices to specific levels and consider sanctions to ensure compliance. He also called for expanding FTC staffing to strengthen enforcement.

Direct government involvement in price setting, however, risks crossing a line. Once the state begins determining prices, the allocation of resources in the market may become distorted. Efforts to eliminate harmful practices should not weaken the broader functioning of the market itself.

Practical challenges also remain. Can the government accurately calculate what prices would have been in the absence of collusion? If authorities impose reductions based on rough estimates, companies and shareholders are likely to resist. And even if a price level is determined, questions remain about how to reflect changing costs, such as exchange rates, wages and profit margins, and how long companies would be required to maintain the new prices.

Fair Trade Commission Chai Ju Biung-ghi announces the review results of a price-fixing case involving three sugar manufacturers and distributors — CJ CheilJedang, Samyang and Daehan Sugar — at the Government Complex Sejong on Feb. 12. [NEWS1]

The concern is not about protecting firms that engage in collusion. Excessive intervention may instead prompt companies to recover losses through other means, shifting hidden costs to consumers, workers or suppliers. Correcting market failure requires adherence to market principles.

There is also a limit to case-by-case intervention driven by presidential attention to specific items. Companies may respond cautiously in the short term, but such oversight cannot be sustained indefinitely.

In practice, the most effective way to discipline corporate misconduct is financial accountability. As large-scale consumer harm from collusion or data breaches increases, calls have grown to introduce U.S.-style class action lawsuits. Concerns about excessive litigation have been overshadowed by repeated corporate wrongdoing.

Alongside stronger corporate self-regulation, what is needed is a balanced government approach that restores fair competition without undermining the foundations of the market economy.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.