Since China’s adoption of its first anti-monopoly laws in 2008, there has not been any major activity by enforcement agencies like NDRC and SAIC until recent months. One of the main reasons behind China’s reservation in implementing the new law was the fact that it could have lost foreign investment. Another reason behind China’s hesitance was its intention to vitalize state-owned corporations as national counterparts to compete against giant multinationals.
However, a new trend arose near the end of last year, as China finally determined to execute investigations on price cartels in the LCD industry and fined Samsung, LG, AUO, HannStar Display, Chunghwa Picture Tubes, and CMI for fixing the prices of LCD panels in Chinese market. The six LCD companies had to pay 353 million RMB in total, an amount that is considered to be one of the highest fines ever.
Anti-monopoly investigations in the LCD industry led to a new phase of investigations in the luxury liquors industry, in which Maotai and Wuliangye were involved. The investigations conducted on these two companies demonstrated China’s determination to create a level playing field and to treat companies equally regardless of their ownership. The Chinese government fined 449 million RMB in total to Maotai and Wuliangye.
Currently, NDRC is investigating a case in the milk powder industry, as several corporations are suspected of forcing retailers to not sell their products under a certain price level. This illegal practice, which is known as ‘retail price maintenance,’ (RPM) is believed to be exercised by a number of international and Chinese companies, including Wyeth, Biostime, Dumex, Abbot, Beingmate, Meiji, Nestle, Fonterra, Mead Johnson, and Frisco. Nonetheless, as NDRC began its investigation, some of the companies like Wyeth and Dumex announced to lower the prices of their products before NDRC forced them to. NDRC’s intervention in RPM’s pricing practices is anticipated to be very popular among the consumers, as the price cut would directly benefit them for at least the short term.
In addition to the milk powder industry, NDRC is also investigating drug making corporations. Multinational companies such as GSK, Merck, Boehringer Ingelheim, Novartis, and Astellas are included along with China’s domestic companies on NDRC’s list for investigation. The investigation is going to concentrate on the costs of production of some corporations as well as the retail prices of products of other companies.
Most recently, Tetra Pak has been the latest multinational corporation amongst the European food packaging industry to be investigated by SAIC. SAIC suspects that Tetra Pak possibly has abused its market dominance. An official from Tetra Pak acknowledged that SAIC requested information regarding its business in China, but said that the company did not receive a formal notice of investigation. Corporations of various industries are waiting to see what other measures might be taken against the packaging industry, and are curious to know which industry will be subject to future investigations.