Photo/Illutration The Japan Fair Trade Commission began investigating Nissin Food Products Co. in April for allegedly fixing the prices of five items. (Kenta Sujino)

The Japan Fair Trade Commission will issue a warning to Nissin Food Products Co. on suspicion of violating the Anti-Monopoly Law by forcing retailers to raise retail prices of five of its major products.

The watchdog will require the major instant noodle manufacturer to not restrict prices and to quickly establish countermeasures for preventing a recurrence.

The warning specifically applies to the company’s five major products. According to sources, this includes the original Cup Noodle, along with its curry and seafood variations. Its Nissin Donbei Bowl Kitsune Udon and Nissin U.F.O. "yakisoba" stir fry noodles are also on the list. 

“It is true that we are under investigation from the FTC,” the company said. “We are earnestly cooperating with the investigation.”

The company allegedly told several hundred retailers across the country to increase prices of the five items and provided a specific amount by which they should raise retail prices.

This practice is believed to have started in 2015. Affected businesses include supermarkets and drugstores.

Retail prices are supposed to be decided by each retailer on its own and manufacturers are prohibited from dictating them under the Anti-Monopoly Law.

This is to ensure that consumers can freely choose stores based on competitive pricing and avoid purchasing products at a higher cost. 

Inflation also plays a role in the investigation. Nissin adjusted its suggested retail prices for Cup Noodle and instant noodles. In June 2022, it upped the suggested retail price of 180 of its products. 

It did so again in June 2023, raising the suggested value of 170 items.

As for Cup Noodle, the suggested retail price was raised from 193 yen ($1.32), excluding tax, to 236 yen over the last two years.

WHAT WAS THE MOTIVE?

Nissin is believed to have coerced retailers into bumping up price tags by telling them other stores would do the same.

In addition to this, the Nissin allegedly set a hard limit to how much retailers could reduce the five item's prices. This lower limit applied even when a store wanted to put products on sale.

The company seemed to be aiming to avoid a price collapse damaging the brand's value amid growing inflation.

The FTC started its survey on Nissin and retailers in April and has since confirmed that the company's headquarters instructed branch offices nationwide to fix retail prices, violating the law.

The watchdog is scheduled to issue the second-most severe warning soon as administrative guidance.

The most severe is a cease-and-desist order where a company will face criminal charges if it fails to comply.

Nissin made around 227.9 billion yen in sales for the fiscal year that ended in March. It boasts the No. 1 position in manufacturing and sales of instant noodles, according to credit research firm Teikoku Databank Ltd.

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