Seven Flour Millers Caught in Six-Year Collusion Face Record 671.045 Billion Won Fine from FTC

The Fair Trade Commission (FTC) has uncovered long-running collusion among seven flour millers and imposed the largest fine in its history. The Ministry of Agriculture, Food and Rural Affairs (MAFRA) said it would exclude the companies from government policy financing support.
According to the Korea Fair Trade Commission (KFTC) on the 20th, seven flour millers — Daehan Flour Mills, CJ CheilJedang, Sajo DongA One, Samyang Corporation, DAESUN Flour Mills, Samhwa Flour Mills and Hantop — were found to have colluded on flour supply prices and volumes for about six years starting in November 2019. The FTC issued corrective orders and imposed a combined fine of 671.045 billion won. It is the largest collusion-related penalty ever handed down by the commission.
The investigation found that the companies had coordinated in advance on the size and timing of price increases, as well as supply rankings and volumes, when dealing with major food makers such as Nongshim, Paldo and Pulmuone. They also colluded on prices for smaller clients and distributors. According to the KFTC, they reached price and volume agreements 24 times in total and held 55 meetings at the executive and working levels during the collusion period.
In particular, they quickly passed on price increases when international wheat prices rose, while minimizing or delaying price cuts when wheat prices fell. The investigation also found that when companies such as Nongshim requested lower delivery prices in line with stable wheat costs, the millers had already agreed on the minimum size of the reduction.
The collusion continued even during the period when the government was supporting flour price stabilization. In the second half of 2022, the government provided a total of 47.1 billion won in subsidies to flour companies in response to a sharp rise in global grain prices, but the firms continued to coordinate price increases.
Related sales in the case totaled 5.69 trillion won. By company, Sajo DongA One received the largest fine at 183.097 billion won, followed by Daehan Flour Mills at 179.273 billion won, CJ CheilJedang at 131.71 billion won, Samyang Corporation at 94.787 billion won, DAESUN Flour Mills at 38.448 billion won, Hantop at 24.291 billion won and Samhwa Flour Mills at 19.448 billion won. KFTC Vice Chairman Nam Dong-il explained, "The fine is calculated by applying a base rate to the related sales, and a 15% base rate was used in this case."
Along with the fines, the FTC also imposed seven corrective orders, including orders to stop the illegal conduct, independently reset prices, and report price changes. In January, the commission had already completed referrals to prosecutors for the seven flour millers and 14 executives and employees involved in the collusion.
As a follow-up to the FTC's penalty, MAFRA said it would exclude the colluding companies from support under its management stabilization fund for flour millers. The fund is a policy loan program for companies that import wheat and process it into flour, offered at a floating interest rate with a one-year maturity.
MAFRA also said it would strengthen oversight of flour prices to prevent a repeat of unfair practices. It plans to monitor flour prices every month and review market trends to respond to price instability or the risk of renewed collusion.
Meanwhile, CJ CheilJedang said, "We deeply apologize for causing concern to the public. We have left the Korea Flour Mills Industry Association to completely block any possibility of contact with competitors." It added, "We will rebuild public trust by contributing to a fair food industry ecosystem."
Earlier, CJ CheilJedang cut the price of its food-service flour products by 4% in January. In February, it lowered prices by up to 6% across all food-service and consumer products, joining the government's efforts to stabilize inflation.
hippo@fnnews.com Kim Chan-mi Kim Seo-yeon Reporter