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Nongshim Accelerating Sales in U.S. Ramen Market after Winning Price Fixing Lawsuit
Nongshim Clears A Big Hurdle
Nongshim Accelerating Sales in U.S. Ramen Market after Winning Price Fixing Lawsuit
  • By Choi Moon-hee
  • January 22, 2019, 15:46
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Nongshim has cleared a big hurdle on its way to global expansion by winning a lawsuit filed by U.S. wholesalers and retailers for allegedly fixing prices.

Nongshim is set to accelerate its sales growth in the U.S. ramen market valued at US$1.2 billion a year as it has cleared a big hurdle.

The Korean instant noodle maker recently won a U.S. class action lawsuit filed by U.S. wholesalers and retailers against it for fixing ramen prices in 2013.

In 2015, Nongshim filed a lawsuit in Korea to nullify the fine imposed on it by the Korean Fair Trade Commission on price fixing allegations. The company successfully defended itself by winning the suit.

The lawsuit was triggered by the Korean Fair Trade Commission, which imposed heavy fines on Korean ramen makers for colluding to fix prices. It fined Nongshim 108 billion won, Samyang Foods 11.6 billion won, Ottogi 9.7 billion won and Yakult Korea 6.2 billion won.

Nongshim immediately appealed to cancel the fine and won the lawsuit in December 2015. The Supreme Court ruled in favor of Nongshim, ordering the Korean Fair Trade Commission to give back the fine to the company.

Yet the litigation spread to the U.S. court. In July 2013, U.S. wholesalers and retailers filed a class action lawsuit against the four ramen noodle companies in Korea, claiming that they had suffered damage due to price fixing in Korea. Although Samyang Foods agreed with the plaintiffs to pay US$1.5 million in damage compensation, Nongshim actively proved that there was no price fixing in the U.S.

After a five-year and five-month trial, the jury ruled that there was no price fixing for ramen in December last year. On Jan. 12, the northern federal court in California ruled in favor of Nongshim. The court did not accept Samyang Foods' statements and material evidence as facts.

In the process, however, Korean ramen companies spent huge amounts of money and resources for six years to prove that they did not fix ramen prices. "About US$500 million was at stake in this lawsuit," said an official of Squire Patton Boggs, a lawfirm that legally represented Nongshim in the United States. "Nongshim won the legal battle by responding very appropriately to Samyang Foods and the plaintiffs."

"We will accelerate expansion of our global business centered on the Shin Ramen brand," a Nongshim official said.