Six flour millers face fines up to W210b over byproduct price-fixing

Six major domestic flour milling companies are set to face proceedings before the Korea Fair Trade Commission after allegedly fixing the sales prices of flour byproducts used as animal feed ingredients for more than eight years. The affected sales tied to the alleged cartel amount to 1.4 trillion won ($1.04 billion), and fines of up to 210 billion won could be imposed.

The Fair Trade Commission's secretariat said Wednesday it had submitted an examination report to the commission and forwarded it to six companies — Daehan Flour Mill, Sajodongaone, Sajodaerim, Samyang, CJ CheilJedang and Hantop — over alleged price-fixing of flour byproducts.

An examination report sets out alleged legal violations and recommended sanctions identified during an investigation. Its submission to the commission and delivery to the companies under investigation formally opens the deliberation process.

FTC examiners determined that the six companies had coordinated their flour byproduct sales prices in advance on a monthly basis from April 2017 to October 2025 — a period of roughly eight years and six months.

Flour byproducts, which include wheat bran and low-grade flour generated during the milling process, are supplied to compound feed manufacturers such as Nonghyup Feed and Chuksan to be used as livestock feed ingredients. The six companies together hold about 78 percent of the wheat bran market.

Oh Haeng-rok, director of the FTC's Cartel Investigation Bureau, described the impact of the price-fixing on consumer prices as "very indirect," but added that it "would have had some direct effect on feed prices, and through that, an indirect — albeit very small — effect on the price of meat that consumers buy."

The combined sales affected by the alleged cartel during the period totaled about 1.4 trillion won. Applying the standard surcharge rate of 10.5 to 15.0 percent would yield a maximum fine of 210 billion won, though the actual amount will be determined through the deliberation process.

The examiners classified the conduct as a serious price-fixing violation under the Fair Trade Act and recommended corrective measures and fines, as well as criminal referrals of the companies and their executives involved.

The companies have up to eight weeks from the date they receive the examination report to submit written responses or request access to evidence. The FTC plans to convene a full commission meeting once the related procedures are complete to make a final ruling on whether the law was violated and what sanctions to impose.

Earlier this year, in May, the FTC fined seven flour companies — Daehan Flour Mill, CJ CheilJedang, Sajodongaone, Samyang, Daesun Flour Mill, Samhwa Flour Mill and Hantop — a combined 671 billion won for fixing the sales prices of flour itself.

In the current byproduct case, Daesun Flour Mill and Samhwa Flour Mill, which were sanctioned in the earlier action, are not among the respondents, while Sajodaerim has been newly added. Investigators found no evidence that Daesun or Samhwa participated in the byproduct price-fixing. Sajodaerim was found to have been involved through its role as a sales agent handling byproduct distribution on behalf of Sajodongaone.

The FTC said it prioritized the flour price-fixing case given its broader impact on people's daily lives. "Flour has a greater and more urgent effect on people's lives, so it was handled first in accordance with our case-processing priorities," Oh said.