CJ fined for attempting to monopolize regional food market

Food distributor plans to sue regulator

By Lee Min-hyung

The country’s competition watchdog has fined CJ Freshway, a food distributor serving large restaurant chains, 24.5 billion won ($17.88 million) for unfairly helping another CJ subsidiary dominate the regional food ingredients distribution market.

The Fair Trade Commission (FTC) has ordered CJ Freshway to address and correct these unfair business practices, which harm the interests of small and medium-sized restaurants and small business owners.

According to the watchdog’s investigation, CJ Freshway sent 221 employees to FreshOne and paid labor costs totaling 33.4 billion won on behalf of the company. CJ Freshway founded FreshOne in 2009 to strengthen its nationwide food distribution network, pledging to create a mutually thriving ecosystem for self-employed individuals and small business owners nationwide.

However, the FTC found that CJ Freshway effectively seeks to eliminate small and medium-sized businesses from the marketplace.

“CJ Freshway did not treat them as partners in its shared prosperity, but as obstacles or potential threats to its business,” the watchdog official said.

“CJ Freshway and CJ Group have joined forces to ultimately systematically drive them out of business.”

CJ Freshway acted as the brains behind FreshOne’s operation, sending hundreds of employees to the company for more than 12 years and footing all the labor costs involved. That allowed the subsidiary to seamlessly dominate the market, according to the FTC.

“FreshOne managed to mobilize professional staff at no cost and increase its competitiveness, which allowed it to gain a significant advantage in the market,” the official said. “The interests of small business owners were ultimately undermined by the conglomerate.”

The latest investigation is significant because the conglomerate’s unprecedented level of workforce support undermined the financial interests and bottom lines of small businesses, the FTC said.

“We will continue to tighten oversight of this type of unfair support by conglomerates and help build a more equitable trading ecosystem,” the FTC official said.

In response, CJ Freshway expressed regret over the latest sanction imposed by the regulator.

The company argued that FreshOne was created through collaboration with regional retail operators, but an investigation by authorities distorted that intention.

The staff sent out also contributed to an increase in sales of CJ Freshway products, indicating that the employees’ role went beyond just creating FreshOne, but involved actively strengthening the company’s market dominance.

The company also said it intends to file an administrative lawsuit against the FTC.