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FTC to probe snack and ramyeon makers for price hike collusion

Published: 14 Apr. 2025, 19:51

A person browses items at a convenience store in Seoul on April 14. [YONHAP]

The Fair Trade Commission (FTC) dispatched investigators to five major food companies — Nongshim, Orion, Haitai, Lotte Wellfood and Crown Confectionery — to examine suspicions of collusion in snack and instant noodle price hikes on Monday.

The commission launched the probe after consumer prices for processed foods rose 3.6 percent on year in March, the highest rate since December 2023.

Prices for processed foods increased faster than the overall consumer price index, which climbed 2.1 percent in the same month over March 2024.

CJ CheilJedang raised the prices of ham and dumpling products by 11 percent, following earlier hikes from Ottogi and Paldo earlier this month.

The FTC's move comes after government ministries failed to stop a wave of price hikes through meetings and requests with food companies between February and March.

Agriculture Minister Song Mi-ryeong met with 17 food companies and urged restraint on Feb. 11. Vice Minister Park Beom-soo followed up with another round of discussions in March.

Companies continued to raise prices through April despite those appeals.

FTC Chair Han Ki-jeong ordered officials to monitor potential collusion and unfair practices during a senior staff meeting on April 7.

Food companies denied collusion, claiming that rising raw material costs and sustained high exchange rates have increased their financial burden as of April.

“Companies with a high proportion of domestic sales are even more concerned,” a food industry insider said, “This is not about excessive profit, but about a minimum level of business normalization.”

The official argued that this is far from "greedflation," where prices are raised without clear cost factors.

Most food firms reported operating profit margins lower than the national average of 6.1 percent for manufacturers in the third quarter of 2023, according to the Bank of Korea.

A person browses items at a convenience store in Seoul on April 14. [YONHAP]

CJ CheilJedang posted a margin of 5.8 percent, Nongshim 4.7 percent and Daesang 4.2 percent in 2023.

Only a few companies like Samyang Foods and Orion exceed 10 percent margins, largely due to strong overseas sales in 2023.

The FTC says it has monitored the prices of essential consumer goods since April 2023 and began this investigation based on more than just simultaneous price increases on Monday.

Critics argue the government may be overreaching by pressuring private firms on pricing and should instead establish a formal dialogue platform with industry leaders.

In June 2023, companies swiftly cut prices after then-Finance Minister Choo Kyung-ho publicly criticized the cost of ramyeon, prompting immediate action within ten days.

“I do question whether the government intends to cover up the issue by interfering in private companies’ pricing decisions,” said Prof. Choi Byung-ho of Pusan National University.“Creating a roundtable for coordination rather than pressure could be one approach.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.

BY JANG WON-SEOK, KIM MIN-JOONG [[email protected]]