'Price-fixing' MSG Powder Firm Taken To Tribunal

The Competition Commission is taking legal action against a seasoning manufacturer for allegedly imposing a minimum resale price when supplying MSG powder to its two main local distributors.

It is the first time the commission is bringing a case of resale price maintenance to the Competition Tribunal.

Resale price maintenance happens when a supplier establishes a fixed or minimum price for its distributors when they resell a product, preventing competition between them.

The competition watchdog on Thursday accused Tien Chu (Hong Kong) Company Limited of continuing to give effect to or engage in resale price maintenance arrangements that began in 2008 and lasted until at least September 2017.

It said Tien Chu allegedly issued notices, reminders and warnings to ensure the distributors did not sell its MSG powder, known as "Finger Citron Ve-Tsin Gourmet Powder", for less than a particular price.

When one of the distributors began complaining in 2016 that the other was snatching customers through lower prices, the commission said, Tien Chu took action to secure compliance with the resale prices it had set, including by using disincentives, threats and penalties.

"The commission has reasonable cause to believe that Tien Chu engaged in [resale price maintenance] conduct which had the object of harming competition in Hong Kong... and constituted serious anti-competitive conduct as defined in the [Competition] ordinance," the watchdog said.

"The commission attempted to resolve the matter by issuing an infringement notice to Tien Chu with specific requirements to be fulfilled. Tien Chu did not agree to offer a commitment to comply with those requirements, thus resulting in the current proceeding against it."

The watchdog said it is seeking remedies before the tribunal, such as an order to impose pecuniary penalty on the manufacturer in question.

The commission said it would not pursue the two distributors in this case.