Suit approved against Nongshim, Ottogi in U.S.

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Suit approved against Nongshim, Ottogi in U.S.

Two major Korean food makers, Nongshim and Ottogi, will face legal problems in the United States after a U.S. district court in California accepted a class action suit against them for price fixing.

About 300 grocery stores in California participated in the suit are seeking damages amounting to more than 800 billion won ($728 million). Most of the stores are in Los Angeles’ Koreatown and cater to Koreans who live there.

The lead plaintiff is Plaza Company, which runs Plaza Market in Koreatown.

In 2013, the company claimed that four Korean food makers - Nongshim, Ottogi, Samyang and Korea Yakult and their U.S. subsidiaries - colluded to fix prices between 2001 and 2008 on dozens of instant noodle products.

The alleged collusion, the market said, resulted in price increases of roughly 54 percent.

Multiple local media outlets reported Thursday that the U.S. District Court for the Northern District of California formally recognized the complaint as a class action suit.

Samyang and Korea Yakult were excluded due to a lack of evidence that they were involved in the alleged price fixing.

The plaintiffs filed their claims based on a ruling by the Korean Fair Trade Commission (FTC) in 2012.

The antitrust regulator imposed a fine of 135.4 billion won on four instant ramen makers for colluding to fix prices in Korea. The plaintiffs then claimed that the conspiracy would also affect the price of ramen sold in the United States and that they incurred damages.

In a mixed ruling, U.S. District Judge William H. Orrick determined that the scheme to raise noodle prices in Korea did affect Korean noodles exported to and sold in the United States.

The FTC said it did not know how its ruling would affect the case in the United States.

“We are not sure whether the ruling by the FTC can be used as evidence against the companies in the U.S.” said a representative of the regulator.

Nongshim said that the price-fixing in Korea is separate from its items sold in the United States.

“Last year, the FTC ruled that exported items were not affected by the price fixing,” said a representative of Nongshim.

“We will actively defend our rights given that we didn’t cause any damage in the U.S. market.”

Nongshim appealed the FTC’s ruling to the Seoul High Court where it was upheld, and the company then filed another appeal to the Supreme Court, where a decision is pending.

According to California-based Courthouse News Service, the 35-page lawsuit stated, “This conspiracy [price fixing] was hidden from the public until July 12, 2012, when the Korean FTC issued an order and findings revealing that the defendants had colluded to increase prices and keep such prices inflated.”

It went on to say that “as determined by the FTC, the truth is that Korean noodle price increases substantially exceeded increased input costs.”

Nongshim’s shares fell more than 3 percent during trading on Friday.


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