Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Wholesaler alleges conspiracy to fix prices of Korean noodles, (Sep 13, 2013)

By Tobias J. Gillett, J.D., LL.M.

A food wholesaler has filed a complaint in the federal district court for the Northern District of California, asserting that producers of Korean noodles conspired to fix prices (PITCO Foods v. Nong Shim Co., Ltd., filed September 6, 2013).

PITCO Foods is a California food wholesaler. Nong Shim Co., Ltd.; Ottogi Co., Ltd.; Samyang Foods Co., Ltd.; and Korea Yakult are South Korea-based producers of Korean noodles, which consist of instant noodles often sold with a seasoning packet or dehydrated vegetables.

According to PITCO’s complaint, which seeks to represent a class of direct purchasers, the producers conspired to fix the price at which Korean noodles were sold in the United States and elsewhere. The complaint claims that Korean noodles have a “different flavor profile” from other varieties of instant noodles and are often marketed as a “premium product.” The Korean noodles market has high barriers to entry from the significant capital costs required to establish a manufacturing plant and related processes, resulting in limited competition, according to the complaint.

The complaint details a scheme under which Nong Shim, as the market leader, would generally raise its prices first, and the other producers would follow. The producers allegedly exchanged non-public pricing information to further this plan. The complaint lists six separate price increases occurring from 2001 to 2008, as well as various meetings, information exchanges, and other alleged collusion accompanying the increases, resulting in a total price increase of approximately 54% during that period. The complaint also refers to proceedings of the Korean Fair Trade Commission (KFTC), which issued a July 12, 2012 order, finding that the producers had conspired to fix the prices of Korean noodles and imposing monetary and injunctive relief, including 136 billion won (approximately U.S. $120 million) in fines.

The complaint claims that the producers’ fraudulent concealment of their collusion tolled the statute of limitations. It asserts a claim for violation of Sections 1 and 3 of the Sherman Act.

PITCO seeks a declaration that the producers’ conduct constituted a per se violation of Section 1, treble damages, a permanent injunction, pre-judgment and post-judgment interest, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 3:13-cv-04148-EMC.

Attorneys: Steven N. Williams (Cotchett, Pitre & McCarthy LLP) and Barbara Hart (Lowey Dannenberg Cohen & Hart, P.C.) for PITCO Foods.

Companies: PITCO Foods; Nong Shim Co., Ltd.; Ottogi Co., Ltd.; Samyang Foods Co., Ltd.; Paldo America; Korea Yakult

News: Antitrust CaliforniaNews