7 flour makers fined $444 mil. for price-fixing scheme

Flour products are displayed at a grocery store in Seoul, April 5. Yonhap

Seven flour makers were fined a combined 671 billion won ($444 million) for colluding on prices and supply volumes for nearly six years, the Fair Trade Commission (FTC) said Wednesday, marking the largest cartel penalty ever imposed in Korea.

The companies are Daehan Flour Mills, CJ CheilJedang, Sajo DongA One, Samyang, Daesun Flour Mills, Samhwa Flour Mills and Hantop.

They engaged in unfair price-fixing activities between November 2019 and October 2025, targeting their major business-to-business (B2B) clients, such as noodle, instant noodles, confectionery and bakery makers, according to the FTC investigation.

Collectively, the seven firms accounted for 87.7 percent of the nation’s B2B flour-based sales in 2024.

The antitrust watchdog said the companies held a total of 24 rounds of collusive agreements covering both price hikes and price cuts, while also coordinating supply quantities. Senior executives and working-level officials conducted 55 meetings to implement the cartel during the period, according to the regulator.

The collusion began after competition intensified in 2019. Daehan Flour Mills had aggressively lowered prices to secure a larger share of supply contracts with Nongshim, the largest flour buyer and a key benchmark customer in Korea.

Rival firms responded with aggressive discount campaigns, prompting leading players to seek ways to stabilize prices and secure market shares.

In November 2019, executives from the industry’s three largest players — Daehan Flour Mills, CJ CheilJedang and Sajo DongA One — along with officials from Samyang, met and agreed to curb excessive competition, maintain appropriate prices and secure stable supply volumes across major corporate customers, including Nongshim and Paldo.

The FTC said the collusion later expanded both in scope and participation. By early 2020, smaller millers had joined the scheme, and all seven companies were coordinating prices for virtually all flour products supplied to customers nationwide from April 2021.

Authorities also found that the firms took advantage of fluctuations in global wheat prices. During the surge in international wheat costs between 2020 and 2022, the companies coordinated the timing and scale of price hikes to quickly pass higher costs onto customers. After global wheat prices began falling in 2023, however, the firms agreed to delay and minimize price reductions for large buyers, such as Nongshim.

Customers browse food products at a supermarket in Seoul, Feb. 27. Yonhap

The FTC noted that the companies continued the collusion even while receiving government subsidies intended to help stabilize consumer prices during periods of inflation.

The government provided approximately 47.1 billion won in subsidies to flour producers on the condition that they freeze prices or limit increases. Despite the support, the collusion persisted, the regulator said.

Flour prices had risen between 38 percent and 74 percent by September 2022, compared with December 2019, depending on each company. The regulator also found that operating profit margins improved significantly among both large and smaller participating firms during the collusion period.

The FTC ordered the companies to cease the illegal practices and mandated independent price-setting measures aimed at restoring competitive market conditions.

The regulator emphasized that the case was particularly serious because the same companies had previously been penalized for flour price collusion in 2006.

“The flour market is closely tied to the daily lives of consumers through products such as instant noodles, noodles, bread and snacks,” an FTC official said. “We will continue strengthening oversight over collusion involving essential food products and respond sternly to violations.”