Japan’s Fair Trade Commission Set to Warn Nissin over Forced Price Hikes; Instant Noodle Maker in Hot Water

The Yomiuri Shimbun

13:46 JST, August 8, 2024

The Japan Fair Trade Commission plans to soon issue a warning to Nissin Food Products Co. over suspicions that the major food maker forced retailers across Japan to raise in-store prices of key products to uniform levels, The Yomiuri Shimbun has learned.

According to sources, the commission suspects the actions of the Osaka-based manufacturer of instant noodle products including Cup Noodle were intended to prevent the prices of its products from being reduced and decided this could amount to resale price restrictions, which are prohibited by the Antimonopoly Law.

Nissin allegedly restricted retailers from freely setting the prices of five of its most popular instant noodle products: the regular-, seafood- and curry-flavored Cup Noodle; Donbei Bowl Kitsune Udon; and Yakisoba U.F.O.

According to the sources, Nissin ordered retailers across Japan, including supermarkets and drugstores, through its wholesalers and other channels to uniformly increase the shelf prices of the products. Nissin allegedly did this twice, in 2022 and 2023. Nissin decided the final prices of the products, and reportedly told businesses concerned about the pricing movements of their rivals that “the same request” had been made to them. In addition, Nissin allegedly also decided the price when retailers planned to hold special sales, so consumers were deprived of the chance to select stores that provided the same products for less.

Nissin pushed for the prices of products, including the five types of instant noodle, in June 2022 and June 2023 to be hiked by a total of 5% to 13%. Retailers apparently complied with these demands out of fear of harming their relationship with a leading food manufacturer.

The cost of shipping to wholesalers has risen due to soaring raw material, fuel and other costs. Nissin apparently sought the price hikes across the nation because of the possibility that it could come under strong pressure from wholesalers to cut prices if retailers continued to offer consumers discounted prices.

Japan’s instant noodle market was worth about ¥603.3 billion in fiscal 2021, and Nissin’s 40.6% share was the largest. The company reported annual sales of about ¥227.9 billion in the business year ending March 2024.

A representative of Osaka-based Nissin Foods Holdings Co., said, “It’s true that [Nissin Food Products] is being investigated by the commission, but I can’t comment on the details.”