Companies claim they followed price guidelines from Finance Ministry


Korean noodle makers are considering legal action against the Fair Trade Commission over sanctions it imposed on them.

The companies producing ramen include Nongshim, which holds the dominant position in the industry.

The FTC fined Nongshim and three other players 135.4 billion won ($120 million) for collusion in fixing prices.

The regulator said that Nongshim, Samyang, Ottogi and Korea Yakult sought to rig prices on six different occasions between 2001 and 2010.

An industry executive said, “The different companies’ similar or identical consumer prices for ramen products were due to guidelines from the Ministry of Finance.”

He argued that the ministry had called on companies to set the prices at a reasonable level.

“The ministry’s instruction came amid mounting inflationary pressure,” he said.

Due to the government’s instruction, the companies had no choice but to consult with public officials and other companies, according to the industry executives.

“Nongshim will soon likely file a lawsuit against the FTC with a court,” an executive said. “Several of the others could join the action.”

The FTC has said the four companies shared sensitive management information such as sales figures, marketing subsidies and new product line-ups.

An annual meeting of company representatives, held every March, had long been a place where rival companies made shady deals, the FTC said.

“Consumers feel there is little difference among instant noodle products. So companies are competing with cheaper prices,” an FTC official said in a statement.

In order to avoid resistance from the public and following sales decreases from individual price hikes, they colluded to fix prices, he said.

The FTC also said the latest punitive measures could end the practice and encourage fair competition within the industry, adding that companies have set prices individually since 2010.

Nongshim previously officially denied that it encouraged other companies in price-fixing, claiming that it raised prices following changes in raw material costs.

“We controlled more than 70 percent of market share and an unrivaled brand power at the time. There was no reason for us to discuss price increases with runner-up companies,” a Nongshim spokesman said.

Despite the well-being trend in recent years, the FTC said, the local market for the popular processed food has seen strong growth largely driven by price hikes and high-end products.

Nongshim, which allegedly played a key role in the collusion, was fined 107.7 billion won, followed by Samyang with 11.6 billion won. Ottogi and Korea Yakult were slapped with fines of around 9.7 billion won and 6.3 billion won, respectively.

By Kim Yon-se (kys@heraldcorp.com)