Seoul: South Korea's antitrust watchdog has imposed a combined 671 billion won (US$443.8 million) in fines on seven flour producers for price fixing. The Fair Trade Commission (FTC) announced the measure following an investigation that found CJ CheilJedang Corp., Daehan Flour Mills Corp., Sajo Dongaone Co., Samyang Corp., Daesun Flour Mills Co., Samhwa Flour Mills, and Hantop Inc. colluded to fix prices from 2019 to 2025.
According to Yonhap News Agency, the companies, which account for 87.7 percent of the domestic business-to-business flour market, were found to have rigged prices for flour supplied to noodle and confectionery manufacturers. "Using their dominant market positions, the companies colluded on the scope of price increases and cuts on 24 occasions, while agreeing on supply volumes and supply priorities for flour delivered to their customers," the FTC stated in a release.
The FTC highlighted that despite previous punishments for collusion in 2006, the companies continued to violate fair trade laws. The illegal practices persisted even while the firms were receiving government subsidies aimed at stabilizing consumer prices from 2022 to 2023. The flour producers were found to have fixed prices for products supplied not only to major food companies like Nongshim Co. and Paldo Co. but also to smaller businesses and retailers.
The investigation revealed that the companies held 55 meetings involving top executives where broad agreements were made, with details finalized through follow-up meetings by working-level officials. The FTC noted that flour prices charged by these companies surged by as much as 74 percent in September 2022 from December 2019 when the collusion began.
"Flour is a staple product and a key ingredient for manufacturers of ramyeon, instant noodles, bread, and snacks. It is one of the products most closely linked to people's livelihoods," the FTC explained. The measure is expected to normalize the market, recover illicit gains, and ease the financial burden on households.
The FTC emphasized its commitment to strengthening surveillance and taking stern action against price fixing involving food products that are closely linked to the everyday lives of people.