Price Fixing Alleged in Ramen Noodles
LOS ANGELES (CN) - Four South Korean companies have fixed the price of instant ramen noodles for more than a decade, a Koreatown market claims in a federal antitrust class action.
The Plaza Company, which runs the Plaza Market in Koreatown, claims the Seoul-based defendants and their U.S. subsidiaries conspired six times between 2001-2008 to fix prices on dozens of Korean instant noodle products, resulting in price increases of roughly 54 percent.
Named as defendants are Nong Shim Co. and its Rancho Cucamonga-based subsidiary, Nong Shim America; Ottogi Co. and its Gardena subsidiary, Ottogi America; Samyang Foods Co. and Samyang USA of Santa Fe Springs; and Korea Yakult and its U.S. affiliate, Paldo America.
"This conspiracy was hidden from the public until July 12, 2012, when the Korean Fair Trade Commission (KFTC) issued an order and findings (the KFTC order) revealing that the defendants had colluded to increase prices and keep such prices inflated. The KFTC order revealed that collusion manifested itself in at least two formal in-person meetings between the defendants (in 2001 and 2008), as well as hundreds of email communications between and among the defendants," the 35-page lawsuit states.
The four noodle companies were ordered to pay a fine of 136 billion won, or $120 million, according to the Yonhap News, South Korea's largest news agency.
Instant noodles are usually sold in plastic cups with seasoning packets and dehydrated vegetables. Several varieties of noodles are sold, including ramen, thick-wheat and flat noodles.
The noodle companies blamed the price increases on rising costs of wheat flour, palm oil, vinyl wrapping, potato starch, and even the weather, Plaza says in the lawsuit.
However, "As determined by the KFTC, the truth is that Korean Noodle price increases substantially exceeded increased input costs," the complaint states.
Plaza Co. claims the conspiracy extended to the U.S. market, and charts year-by-year price increases from 2003 to 2008.
Nong Shim's U.S. sales in 2006 totaled $47.7 million. The companies "sold hundreds of millions worth of noodles in the United States," the lawsuit says.
Another South Korean company, Binggrae, also fixed prices but left the noodle business in 2003, according to the complaint. Binggrae is not a party to the lawsuit.
The Korean Fair Trade Commission fined Nong Shim 107.7 billion won, and Samyang 11.6 billion won. Ottogi was ordered to pay a 9.7 billion won fine, while Korea Yakult was hit with a 6.3 billion won fine, according to the English-language edition of the March 23, 2012 Yonhap News.
Plaza seeks damages and an injunction against the price-fixing conspiracy.
It is represented by Lionel Glancy with Glancy Binkow & Goldberg.
Samyang USA and Paldo America declined to respond to requests for comments. Nong Shim America and Ottogi America did not immediately respond.