Daehan Flour Mills Faces Fines, Lawsuits and Price Reset After Six-Year Cartel
Daehan Flour Mills has recognized a finalized antitrust penalty of KRW 112.045 billion after regulators found that seven Korean millers coordinated flour prices and customer-level supply volumes for six years. The company also faces a mandatory price review, possible subsidy recovery and private damages claims from commercial buyers.
Six years of price and supply coordination
Daehan Flour Mills faces a widening set of financial, regulatory and legal consequences after South Korea’s Fair Trade Commission found that seven milling companies coordinated the flour market over a six-year period. According to Consumuch, the companies held 24 meetings between November 2019 and October 2025, agreeing on the timing and size of flour price increases and reductions as well as supply volumes for individual customers.
The commission announced combined penalties of KRW 671 billion on May 20, described by Consumuch as the largest ever imposed in such a case. Daehan Flour Mills was initially assigned KRW 179.3 billion, the second-highest amount after Sajo DongA One’s KRW 183.1 billion. The initial figure was nearly three times Daehan Flour Mills’ consolidated operating profit of KRW 62.3 billion for the previous year.
The final bill was lower. Daehan Flour Mills said in its half-year report that it received the commission’s written decision and payment notice on July 14 and reflected a finalized penalty of KRW 112.045 billion in its financial statements. That was about KRW 67.2 billion below the amount first announced.
Penalty compounds pressure on earnings
The company had already recognized an estimated KRW 94.354 billion as an other provision in its 2025 accounts. Consumuch reported that this charge was the main reason Daehan Flour Mills recorded a consolidated net loss of KRW 25.1 billion for the year. When the finalized penalty exceeded the provision, the miller booked the KRW 17.691 billion difference as a miscellaneous loss in the second quarter.
The financial exposure may extend beyond the antitrust penalty. The government paid KRW 54.6 billion in subsidies to support flour price stability between June 2022 and February 2023, after international wheat prices surged following the Russia-Ukraine war. Of that total, KRW 47.1 billion went to the seven companies implicated in the cartel, including Daehan Flour Mills.
The Ministry of Agriculture, Food and Rural Affairs is considering whether the payments should be recovered under subsidy legislation, including provisions covering fraudulent receipt or failure to meet eligibility requirements. The Korea Agro-Fisheries and Food Trade Corporation is conducting a legal review, with the procedure expected to move forward following delivery of the antitrust commission’s written decision.
Price reset and customer claims add uncertainty
Alongside the fine, the commission issued a price redetermination order on May 20, requiring the companies to reset prices to the level that would have prevailed under pre-collusion competition and report the result in writing. Consumuch said it was the first use of the measure in 20 years. Failure to comply can carry imprisonment of up to two years or a fine of up to KRW 150 million under Article 125 of the Fair Trade Act.
Daehan Flour Mills had announced an average flour price reduction of 4.6% on January 28, effective February 1. The cut took effect one day before prosecutors indicted six flour companies. The company attributed the reduction to a stabilizing won-dollar exchange rate and its participation in the government’s price-stability policy.
Private litigation creates another potential liability. Twelve Chinese restaurants in Seoul and Gyeonggi Province filed a damages suit against the seven millers at the Seoul Central District Court on July 26, naming Daehan Flour Mills as a defendant. The current claim is a partial demand of KRW 1 million per plaintiff, but their representative plans to seek higher amounts after reviewing purchase records and estimating competitive prices. The Korea Confectionery Association has also announced plans to pursue litigation for members.
Earlier case provides a damages benchmark
Past litigation suggests buyers may seek the difference between actual flour prices and estimated prices under normal competition. In a case arising from the 2006 flour cartel, the Seoul High Court ordered CJ CheilJedang to pay KRW 12.35 billion and Samyang Corporation KRW 2.27 billion to Samlip Food in October 2010, a judgment later upheld by the Supreme Court. The court rejected arguments that damages should fall because buyers had passed higher costs to consumers.
The latest case is also Daehan Flour Mills’ second flour-cartel offense. Although it was not a defendant in the earlier Samlip damages action, the company received a KRW 12.1 billion antitrust penalty in 2006 for the same type of conduct. The combination of a repeat offense, mandatory repricing, subsidy scrutiny and buyer claims means the final commercial cost remains unresolved even after the headline penalty was reduced.
