FTC Begins Review of Penalties for Seven Flour Companies After Four‑Month Cartel Probe
Updated (2 articles)
FTC Initiates Penalty Review for Flour Cartel The Fair Trade Commission announced on Feb. 20 that it has opened formal procedures to evaluate sanctions against seven flour manufacturers accused of colluding on prices and market allocation from Nov 2019 to Oct 2025 [1]. The review follows a four‑month investigation that gathered evidence of coordinated conduct across the sector [1]. Regulators aim to determine appropriate fines and corrective orders before issuing a final decision [1].
Four‑Month Investigation Uncovered 88% B2B Market Control Inspectors concluded the firms formed a cartel that fixed wholesale flour prices and allocated sales volumes, dominating roughly 88 percent of South Korea’s business‑to‑business flour market [1]. The illegal coordination spanned nearly six years, influencing both pricing strategies and distribution channels [1]. Evidence was compiled through document reviews, witness interviews, and market data analysis [1].
Key Companies Identified Include Dae Sun, Daehan, CJ Cheiljedang The FTC named Dae Sun Flour Mills Co., Daehan Flour Mill Co., and CJ Cheiljedang Corp. among the seven implicated firms, with four additional companies also cited in the report [1]. These entities collectively hold the majority of domestic flour production capacity [1]. Their participation in the cartel is alleged to have suppressed competition and inflated prices for downstream buyers [1].
Collusion Affected 5.8 Trillion Won Revenue, Fines Proposed The commission estimated that the collusive practices impacted about 5.8 trillion won in combined revenue across the affected period [1]. Under Korean antitrust law, the FTC can impose fines up to 20 percent of the sales linked to the illegal conduct [1]. Such penalties are intended to serve as a strong deterrent against future market abuse [1].
Regulator Sends Report, Sets Deadline for Firm Responses The FTC has forwarded the investigation report to the seven companies, allowing them to exercise defensive rights and submit comments [1]. The regulator emphasized a swift resolution to restore market stability and protect consumers [1]. A final decision on sanctions is expected after the firms’ responses are reviewed [1].
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Timeline
Nov 2019 – The seven flour firms begin a cartel that fixes prices and allocates sales volumes across South Korea’s B2B flour market, eventually controlling about 88 % of that segment[1].
Oct 2025 – The alleged flour price‑fixing scheme ends, concluding a six‑year period that later impacts roughly 5.8 trillion won in combined revenue[1].
Early Dec 2025 – President Lee Jae Myung orders an inquiry into sanitary‑pad pricing, saying “sanitary pad prices in South Korea are unusually high compared with those in other countries”[2].
Dec 24, 2025 – The Fair Trade Commission launches a probe of Yuhan‑Kimberly, LG Unicharm and Cleanwrap, dispatching investigators to each headquarters to examine possible price‑rigging under antitrust law[2].
Feb 20, 2026 – The FTC starts formal review of penalties for the seven flour companies, sending its investigation report to the firms so they can exercise defensive rights while the commission moves toward a final decision[1].
Feb 20, 2026 – The FTC estimates the collusion affected about 5.8 trillion won in revenue and proposes fines that could reach up to 20 % of the sales linked to the cartel, providing a substantial financial deterrent[1].
2026 (later) – The FTC plans to issue a final decision and corrective order against the flour firms, with the maximum penalty potentially amounting to 20 % of the affected sales[1].