[26.02.02] ₩6 Trillion Flour Cartel Uncovered in ₩10 Trillion Essential Goods Case

₩6 Trillion Flour Cartel Uncovered…Essential Goods Price-Fixing Totals ₩10 Trillion

📍Mass indictments of flour mills, sugar companies, and power equipment firms…Prosecutors vow strict punishment for livelihood crimes

Executives and employees of companies that engaged in price-fixing for years in essential goods such as flour, sugar, and electricity—causing price hikes totaling nearly ₩10 trillion—have been indicted in large numbers.

Chief Prosecutor Na Hee-seok of the Fair Trade Investigation Division at the Seoul Central District Prosecutors' Office is briefing on the results of the Seoul High Prosecutors' Office's intensive investigation into crimes disrupting the livelihoods of ordinary citizens.

---

🔹 Prosecutors indict 52 over essential goods cartels
The Fair Trade Investigation Division of the Seoul Central District Prosecutors’ Office announced on the 2nd that it indicted a total of 52 individuals after a five-month intensive investigation, from September last year to last month, into cartel activities that distorted the market for essential goods.

🔹 Flour price-fixing…six milling companies indicted
Prosecutors indicted six corporations—Daehan Flour Mills, Sajo Dongawon, Samyang Corporation, Daeseon Flour Mills, Samhwa Flour Mills, and HanTop—along with 20 executives and employees, including CEOs, without detention for violating the Fair Trade Act.

They are accused of colluding from January 2020 to October last year to prearrange whether flour prices would change, the extent of increases, and the timing of adjustments.

🔹 Flour prices surged up to 42.4%
According to prosecutors, flour prices rose from ₩649 per kilogram in January 2021 to ₩924 in January 2023, an increase of up to 42.4%. Even after partial declines, prices remained about 22.7% higher than pre-cartel levels.

A prosecution official stated that responsibility was clearly established not only for employees who executed the cartel but also for CEOs who bore ultimate responsibility.

🔹 Sugar and power equipment bid rigging also uncovered
In November last year, prosecutors also investigated sugar price-fixing, indicting two senior executives from companies including CJ CheilJedang and Samyang with detention, and 11 others without detention. They were found to have colluded from February 2021 to April last year.

Sugar prices increased by up to 66.7% compared to pre-cartel levels.

Additionally, individuals involved in bid rigging over 7 years and 6 months for equipment tenders issued by Korea Electric Power Corporation were indicted last month. Four employees from Hyosung Heavy Industries, Hyundai Electric, LS Electric, and Iljin Electric were detained, while seven individuals and eight corporations were indicted without detention.

🔹 Total cartel scale estimated at ₩9.94 trillion
The total scale of cartel activities was estimated at ₩9.9404 trillion—₩5.9913 trillion for flour, ₩3.2715 trillion for sugar, and ₩677.6 billion for KEPCO tenders—based on B2B sales figures.

Food companies such as Nongshim, Paldo, Orion, and Binggrae may pursue damages claims due to the flour price-fixing.

🔹 Illicit gains up to ₩8.986 trillion…evidence concealment found
Illicit gains were estimated between ₩107 billion and ₩312.4 billion depending on calculation methods. Applying the OECD standard of 15% of revenue, illicit gains reach ₩8.986 trillion.

Prosecutors also confirmed attempts to conceal evidence. Recordings showed milling company officials referring to the Fair Trade Commission as “Professor Gong” and saying they should avoid contact to prevent detection.

🔹 Leniency and calls for stronger punishment
CJ CheilJedang was excluded from indictment after applying for leniency in the flour case, while Daehan Sugar received similar treatment in the sugar cartel case.

Chief Prosecutor Na Hee-seok stressed the need to raise statutory penalties, noting that the U.S. imposes up to 10 years in prison for individuals involved in cartels, while penalties in Korea remain relatively low. 

Prosecutors stated that cartel-driven price hikes directly burdened consumers and emphasized that crimes disrupting the livelihood economy would be strictly punished.

One-line summary : Prosecutors indicted 52 individuals for price-fixing cartels in essential goods, uncovering nearly ₩10 trillion in market manipulation.