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China fines Japanese auto parts firms for ‘price fixing’ under anti-monopoly law

Out-Law News | 20 Aug 2014 | 5:17 pm | 2 min. read

China has fined 10 Japanese auto parts firms a total equivalent to more than $200 million for price-fixing, following investigations under the country’s anti-monopoly law.

China’s National Development and Reform Commission (NDRC) said the suppliers were “found to have frequently met bilaterally or multilaterally” and negotiated prices and implementing agreements over quoted prices in relation to orders for the Chinese market, the Xinhua News Agency reported.

The auto parts suppliers who were fined by the NDRC were Denso, Aisan, Mitsubishi Electric, Mitsuba, Yazaki, Furukawa, Sumitomo and bearing makers NSK, JTEKT and NTN, Xinhua said.

According to Xinhua, the NDRC exempted two other companies from fines, auto parts supplier Hitachi and bearing maker Nachi, as they were the first “to report their monopoly agreements and offer important evidence”.

“Such moves by the 12 Japanese auto parts suppliers have violated the Chinese anti-monopoly law, excluding or restraining market competition and thus damaging the rights and interests of downstream manufacturers and consumers,” the NDRC said.

China’s commerce ministry spokesman Shen Danyang told Xinhua earlier this month that foreign investors had played “an active role” in China's social and economic development over the past three decades.

"The Chinese government has always been dedicated to creating an equitable business environment for companies and safeguarding the order of market competition," Shen said.

Shen said China would continue to adopt “the same standards for domestic and foreign companies and welcome multinationals to cooperate with Chinese firms in diversified ways... meanwhile foreign investors and the companies they invest in must strictly comply with Chinese laws and regulations and fulfil their social obligations.”

According to figures provided by the Japan External Trade Organization (Jetro) for 2013, exports to China fell 10.2% to $129.88 billion, posting a double-digit decline for the second straight year, while imports from China fell 3.7% to $182.11bn, which Jetro said was the first fall since 2009.

Jetro said: “On the back of China’s slowdown in domestic demand in line with the country’s economic structural reforms, near-completion of facility investment and changing demand, a serious decrease was seen in the exports of main products, including general machines such as construction, mining and metal processing machines, as well as electric devices such as semiconductors. Those of automobiles drastically fell after Japan-related demonstrations in China and have continued to drop at double-digit level.” However, Jetro said the margin of decline was “drastically narrower than the 42.8% drop” in the first half of 2013.

Firms found to be in contravention of China’s anti-monopoly law, which came into force in 2008, may be fined up to 10% of total sales recorded in the preceding year. According to the China Research Center (CRC), the legislation was the first comprehensive anti-trust law in the history of the People’s Republic of China.

The CRC said: “While the law is a major step in establishing a system of commercial law consistent with international norms, the text and the system that will interpret and apply it raise serious concerns about whether the law will, in practice, be used primarily to protect competition and consumer welfare in China, or whether it will be used as a protectionist device to favour state-owned enterprises and privatised indigenous companies in Chinese markets.”