The Fair Trade Commission (KFTC) has handed down the largest-ever fine in the history of domestic collusion cases, penalizing seven major flour milling companies a staggering 671.045 billion won (approximately $444 million USD). An investigation by the International Cartel Investigation Division revealed that Daehan Flour Mills, CJ CheilJedang, Sajo Dongawon, Samyang Corporation, Daesun Flour Mills, Samhwa Flour Mills, and Hantop secretly fixed flour prices and supply volumes for approximately six years, from November 2019 to October 2025.
Holding a combined 87.7% share of the domestic business-to-business (B2B) flour sales market, these companies utilized their market dominance to manipulate prices for major food producers like Nongshim, Samyang Foods, and Lotte Confectionery. The cartel held 55 separate high-level and working-level meetings to orchestrate 24 distinct collusive agreements. Over time, the scope of the conspiracy expanded sequentially to cover all flour products and all tiers of customers, effectively eliminating market competition.
The KFTC noted that the severity of the sanctions reflects a profound breach of public trust. The millers actively exploited global supply chain disruptions; they coordinated rapid price hikes when international raw wheat prices surged between 2020 and 2022, but intentionally delayed price reductions when import costs fell after 2023. Remarkably, the companies continued their illicit price-fixing even while receiving 47.1 billion won (around $31.2 million USD) in taxpayer-funded government subsidies designed to stabilize domestic food prices. As a result of the collusion, wholesale flour prices spiked by up to 74% compared to pre-cartel levels, significantly driving up operating profit margins for the millers at the expense of consumer food prices.
Compounding the violation, all seven companies were previous offenders who had been sanctioned by the KFTC for identical behavior in 2006. Because the previous penalties failed to deter them, the commission has now coupled the historic financial penalties with strict corrective measures, including a mandatory independent price reassessment order aimed at forcing market prices back to normal levels. The KFTC has pledged to further strengthen its monitoring of staple food items to protect household budgets from monopolistic exploitation.
