Major South Korean flour milling companies, including Daehan Flour Mills and CJ CheilJedang, are facing allegations of price fixing for wheat byproducts used as animal feed over a period of more than eight years. This collusion may have affected food prices through its impact on feed costs.
The Fair Trade Commission (FTC) submitted a report on the price-fixing case involving wheat byproducts to the commission on October 13, and it was sent to six companies: Daehan Flour Mills, Sajo Dong-Awon, Sajo Daelim, Samyang Foods, CJ CheilJedang, and Hantop, on October 14.
FTC investigators determined that these companies agreed on the selling prices of wheat byproduct products from April 2017 to October 2025, totaling eight years and six months. The estimated sales affected by the collusion amount to 1.4 trillion won. The penalty rate for fines is set between 10.5% and 15.0%, which could result in fines of up to 210 billion won based on sales figures.
Wheat byproducts are non-edible substances produced as byproducts in the process of making edible flour. Wheat gluten and other inferior products are typical examples, primarily used as ingredients in livestock feed. The companies implicated in the collusion hold a 78% market share in the wheat gluten market, while the market share for inferior products is harder to determine.
The impact of the wheat byproduct price fixing could extend to feed prices, which in turn may affect livestock prices. Since wheat gluten and inferior products are used as ingredients in compound feed, the cost of these raw materials influences feed manufacturing costs, which ultimately affects the production costs for livestock farmers.
Oh Haeng-rok, head of the FTC's cartel investigation division, stated, "Since wheat byproducts are raw materials for feed, they likely had some direct impact on feed prices. This could indirectly affect the prices of meat purchased by consumers, albeit to a very small extent."
However, the FTC has not determined the specific extent of price increases or the scale of consumer harm resulting from the collusion. It is also difficult to ascertain how much the collusion has been reflected in final meat prices through feed prices and livestock production costs, according to the FTC.
This collusion is being investigated separately from a previously uncovered flour price-fixing case, although both investigations were conducted simultaneously. The companies involved and the duration of the collusion differ, and the wheat byproduct collusion reportedly began before the flour collusion. The FTC explained that it prioritized addressing the flour collusion due to its greater impact on public life and the urgency of the matter. The investigation into the byproduct price fixing concluded in October of last year.
Investigators have classified this conduct as a "very serious violation" under the Fair Trade Act and have recommended corrective measures, fines, and criminal charges against the corporations and their executives. All six companies are included in the recommendation for prosecution.
However, the report is based on the investigators' findings and recommendations, and it does not represent the FTC's final judgment. The commission will review the case to determine whether a violation occurred and what specific penalties will be imposed.
* This article has been translated by AI.
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