Ramen Noodle Price-Fixing Scam Went on for Years

ramen_noodle_price_fixingFor ten years, four South Korean companies allegedly fixed the price of instant ramen and ramen-style noodles.

According to the Plaza Company, a Koreatown market that runs the Plaza Market, the four defendants in a federal antitrust class action conspired on a number of occasions to fix products on dozens of the instant noodle products, Courthouse News Service reported. In fact, the Seoul-based firms and their subsidiaries in the United States conspired to price fix the products’ pricing at least six times between 2001 and 2008, leading to price increases of some 54 percent.

The four firms named in the antitrust class action 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
  • Korea Yakult and its U.S. affiliate, Paldo America.

South Korea’s, Binggrae, which is not a party to the lawsuit, also fixed prices but exited the noodle business in 2003, according to the complaint, Courthouse News Service noted.

“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, according to Courthouse News Service.

The instant noodles are typically packaged in plastic cups with seasoning packets and dehydrated vegetables. There are a number of varieties in an array of flavors and the noodles choices include ramen, thick-wheat, and flat noodle, according to Courthouse News Service.

For their part, the noodle companies argued that it was the rising costs of wheat flour, palm oil, vinyl wrapping, potato starch, that led to their higher pricing. They also blamed the weather for the increased pricing, according to the lawsuit, wrote Courthouse News Service. The complaint indicates that, “As determined by the KFTC, the truth is that Korean Noodle price increases substantially exceeded increased input costs.”

Plaza Co. claims the conspiracy involved the United States market and provided information on yearly increases from 2003 to 2008.
The companies “sold hundreds of millions worth of noodles in the United States,” the lawsuit says, according to Courthouse News Service, which noted that Nong Shim’s U.S. sales in 2006 alone amounted to $47.7 million

The KFTC ordered the noodle companies to pay fines totaling 136 billion won—$120 million American dollars—according to the Yonhap News:

  • Nong Shim: 107.7 billion won
  • Samyang: 11.6 billion won
  • Ottogi: 9.7 billion won
  • Korea Yakult: 6.3 billion won

Plaza is seeking both damages and an injunction against the price-fixing conspiracy.

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