Noodle makers face price-fixing probe

PUBLISHED : Friday, 17 August, 2007, 12:00am
UPDATED : Friday, 17 August, 2007, 12:00am

The central government has accused a group of instant-noodle makers of price manipulation, sending a warning to food industry associations against collusion in the run-up to the 17th National Congress.


The National Development and Reform Commission said on its website yesterday that the mainland chapter of the International Ramen Manufacturers Association had held three meetings this year with manufacturers who decided together to raise prices and notify the public in July.


Since then, premium noodles have cost about 20 fen more, and those selling for up to 1 yuan - accounting for about 60 per cent of the mainland market - have been costing an average of 20 per cent more, with some rising by up to 40 per cent.


The price increase followed rises in the retail cost of pork, eggs, rice, poultry and vegetables, and generated widespread discontentment among low-income earners. Stability in food prices is a particularly sensitive issue in the lead-up to major political meetings.


The NDRC said the price manipulation caused consumers to queue up in some places, fearful of further increases.


It ordered the chapter to reverse the decision and admit its wrongdoing to the public. The commission also said it would further probe possible price collusion by some companies and the association.


'All industry associations and operators should learn a lesson. Those mulling price rises should abandon their plans immediately. Those which have taken such action should stop at once,' the commission warned.


Data provided by the ramen association showed that the cost of ingredients, ranging from palm oil to wheat flour and chilli, had risen by 19.5 per cent this year and all manufacturers were operating at a loss.


The commission conceded it was understandable for companies to adjust prices to address higher costs but said the decision should be made by operators instead of industry associations.


The central government has launched a nationwide effort to punish collusion to raise food prices.