Nongshim says US class action would be ‘baseless’

November 14, 2014
(Korea Times file)

(Korea Times file)

By Park Si-soo

Korea’s leading ramen maker Nongshim claimed Friday that a potential class action by U.S. retailers against it is “baseless” because products they sold in America had nothing to do with a ruling by the Fair Trade Commission (FTC).

“The FTC’s investigation focused solely on noodles produced for the domestic market. Thus it’s a baseless claim that the U.S. plaintiffs were affected by alleged price rigging,” a Nongshim spokesman told The Korea Times.

Nongshim and Ottogi may face a reported fine of $800 million in the U.S. for price fixing of instant noodles sold there between 2001 and 2010.

U.S. District Judge William Orrick cleared the way last week by giving some 300 American retailers the green light to file an anti-trust class action against the two.

The judge dismissed a complaint against two other Korean noodle makers ㅡ Samyang Foods and Korea Yakult ㅡ for lack of evidence.

The Nongshim spokesman argued that the FTC statement issued on July 26 last year backed his claim. Lee Yong-soo, an FTC director familiar with the issue, confirmed this.

Nongshim reported 2.087 trillion won in sales last year, but it refused to reveal sales generated in the U.S.

“We opened our own factories in the U.S. in 2005. So our exports to the U.S. have since declined,” the spokesman said.

Ottogi posted 1.7 trillion won in sales last year, with around 10 billion won generated in the U.S., said its spokesman.

The U.S. federal judge was quoted as saying that the retailers have “plausibly alleged” that the two firms had been engaged in price rigging. The judge is expected to ask the Seoul-based firms to file a defense against the allegations.

“This is the beginning of the legal action,” the Nongshim spokesman said.

The Ottogi spokesman voiced a similar view, saying the company is making preparations for the U.S. court case.

The U.S. retailers collectively raised the issue in July 2013 ㅡ one year and four months after the FTC slapped Nongshim, Ottogi, Samyang Foods and Korea Yakult with a hefty collective fine of 135.5 billion won ($123.2 million).

“The companies exchanged detailed information on planned price hikes so others could take similar action,” the FTC said at the time. “Such an illegal practice led to an unjustifiable price hike of their products that hurt consumers.”

The food companies took the case to court, but the Seoul High Court ruled in favor of the FTC, ordering Nongshim and Ottogi to pay 108.7 billion won and 9.7 billion won in fines. The case is pending at the Supreme Court.

The American plaintiffs argue that they were also victims of the price rigging since they imported the accused firms’ noodles for many years.