Investigation of government and liquor industry price hike trends
Interpretation of “Putting the brake on the increase in the price of alcoholic beverages”
To examine the competitive structure and collusion in the liquor industry
On the 19th, citizens shop in the liquor section of a large supermarket in Seoul. According to the National Statistical Portal of the National Statistical Office on the same day, the price of alcoholic beverages increased by 5.7% compared to the previous year as the price of alcoholic beverages such as beer and soju increased one after another last year. This is the highest rate of increase in 24 years since the 11.5% increase in 1998 right after the financial crisis. 2023. 2. 19. Yonhap News
As concerns about soaring alcohol prices due to the increase in liquor tax and alcohol prices grew, the government launched a fact-finding investigation into the liquor industry. It is a move to refrain from raising the price of alcoholic beverages as much as possible. It reflected the sense of crisis that public sentiment would turn their backs on the government and the ruling party if ‘6,000 won per bottle of soju’ became a reality following the ‘heating cost bomb’.
It was reported on the 26th that the Ministry of Strategy and Finance and the National Tax Service had launched a fact-finding investigation to look at the liquor industry’s price hike movements and manufacturers’ profits. The Fair Trade Commission is said to be looking at the possibility of collusion among liquor companies and the competitive situation.
First, the Ministry of Strategy and Finance began to examine the factors that increased the price of soju. This is to determine if the rise in raw material prices, fuel costs in the manufacturing process, and bottle prices are at a level that will lead to an increase in soju prices. It is also monitoring the earnings situation of liquor companies. It is interpreted as an intention to see if liquor companies are trying to raise the price of alcohol while holding a bonus party like banknotes. As a result, it is a task to find a basis or justification to prevent the liquor industry from raising the price of alcohol.
It is poised to examine the competitive structure of the liquor industry. This is to check whether the monopoly structure formed in the production, distribution, and sales of alcoholic beverages is hurting competition and lowering the barriers to raising alcohol prices. If competition in the market is not smooth, the government can promote a plan to competitively lower the price of alcohol by introducing more companies into the market.
Furthermore, it plans to look into price fixing in the liquor industry. As the Fair Trade Commission said, “This year, we will focus on investigating collusion in the public livelihood field that increases the burden on the people,” it is expected that alcoholic beverages, which are no different from the daily necessities of the common people, will not be an exception.
The National Tax Service held a private meeting with representatives of liquor companies. It was said that the purpose of the government agency was to communicate with the liquor industry and listen to their difficulties, but in fact, it was said that the National Tax Service had become a venue to persuade the industry to refrain from raising factory prices.
Regarding the government’s all-round investigation to prevent alcohol price hikes, an official from a liquor company turned the arrow, saying, “Liquor tax hikes and factory price hikes are not the problem, but restaurants that sell alcohol at a high price.”
Reporter Sejong Lee Young-joon