Instant noodle manufacturers association slapped down by reform commission for price fixing

The China arm of the International Ramen Manufacturer's Association (IRMA) (which is basically the international association of instant noodle makers) has been given one big tight slap by the National Development and Reform Commission (NDRC) for price fixing.

About three weeks ago, prices of instant noodles below RMB1 per pack rose between 20 and 40 percent in a nationwide price hike. Prices of instant noodles above RMB1.50 per pack rose on average RMB0.20 per pack.

A week after the price hike was announced, a lawyer by the name of Qiu Baochang, representing the China Consumers Association, filed an appeal to the NDRC to investigate the legitimacy of the price hike, alleging that IRMA's collective decision might have breached China's Price Law and infringed upon consumer rights.

Well, the NDRC, bless their heart, found in investigations that the price hike was indeed on the agenda of three meetings on 26 Dec 2006, 21 April 2007 and 5 Jul 2007, and found them guilty of breaching Section 14.1 of China's Price Law. And since then, IRMA China has annulled all the decisions made through the above three meetings.

This was an important decision because manufacturers with IRMA China hold a combined 95 percent share of the domestic market, and China in turn produces 51 percent of all instant noodles in the world, and that's a whopping 46 billion packets per year.

Now, don't get us wrong. We are happy to know that the much-derided China Consumer's Association appears to be gaining some bite at last, but we're just wondering how the collective decision to raise prices by the instant noodle association is any different from last week's decision taken by the nation's state-owned airlines to collectively raise prices, all in the name of introducing "express" services?

The question that begs to be asked now is: Will the China Consumer's Association ever find enough muscle to take on state-owned enterprises like the airlines some day?

Related links
China Daily: More instant noodle makers join price hike
China Daily: Lawyer appeals to gov't over instant noodle price hike
Shanghaiist: Why have air ticket prices gone up?