The National Commission on Corporate Partnership (NCCP) designated the tofu market as a type of business suitable for SMEs in the end of 2011 in order for levelling the playing field between large businesses and SMEs. This paper examines the effects of the designation on market competition and social welfare. The tofu market in Korea consists of three dominant firms and many fringe firms. Based on dominant firm theory, we thus derive the deadweight loss function depending on the dominant firms’ market shares, profits and behavior. We measure the deadweight loss in the market from 2011 to 2013, and find that the deadweight loss has increased since the designation. We suspect the results come from the refrainment of competition among the dominant firms caused by the designation. The total market share of the dominant firms has been restricted not to exceed 80% after the designation. To satisfy the restriction, they reduced promotional activities such as price discount or 1+1 event. As a result of it, it seems that the profitability of each large firm is improved but consumers end up paying more.