Baixiang Food Group and other instant noodle manufacturers have brought a complaint against their competitor Kangshifu, claiming that it unfairly dominates the instant noodle market in China. Kangshifu has also been accused of engaging in price dumping through its subsidiary brand Fumanduo. Kangshifu contests both assertions.
According to data published in December 2009, Kangshifu instant noodles have a market occupation rate of 41.7% and represent 54.6% of the market by sales volume.(1) Fumanduo instant noodle products have a market share of around 12%. A spokesperson for Kangshifu has stated that Fumanduo produces the instant noodles at a cost of between Rmb1 and Rmb1.50. The packets also sell for between Rmb1 and Rmb1.50. Kangshifu argues that its pricing is intended to protect product quality at the lower end of the instant noodle market, and that the numerous competing companies in this section of the market are increasingly being joined by larger producers.
According to the Anti-monopoly Law, monopoly status in a domestic industry is determined in terms of dominant market position. An undertaking cannot be assumed to have a dominant market position unless "the relevant market share of one undertaking is 50% or more". However, the law also provides that such dominance is punishable only where the undertaking in question abuses its position.
If Kangshifu has sales of 54.6%, it meets the dominant market position criterion. However, the question is whether the company sells its products at below cost price without a reasonable excuse. It is likely that more evidence will be needed to show whether Kangshifu is abusing a dominant market position.