Businesses urged to comply with law as 12 Japanese auto firms investigated

Experts urged foreign companies on Wednesday to comply with China's antitrust laws amid a slew of investigations, with more in the pipeline.

The series of anti-monopoly investigations into leading companies showed no signs of abating.

The National Development and Reform Commission said 12 Japanese auto companies have been investigated for suspected price manipulation of parts and bearings and its bureaus in Shanghai and Hubei province are completing probes into US carmaker Chrysler and German manufacturer Audi.

It said these companies will be fined soon, without giving details of the amount.

The announcement follows a surprise raid on Mercedes-Benz's Shanghai office on Monday and its distributors in five Chinese cities last week.

Consultancy firm Accenture's office in Dalian, Liaoning province, which provides financial services for Microsoft China, was visited by a State Administration for Industry and Commerce team on Wednesday.

The administration - another antitrust regulator - is seeking evidence of suspected monopoly practices against the US software giant.

Accenture said it was providing client information to the Chinese government, without elaborating.

Experts said the intensified antitrust investigations have been launched as regulators now feel more comfortable in dealing with them.

Huang Yong, deputy head of the expert advisory group of the State Council's anti-monopoly committee, said Chinese regulators have accumulated substantial experience in evidence collection in the six years since the Anti-Monopoly Law was introduced.

Because of a lack of experience in the early stages, the law had not been enforced well. "These companies have to be aware that anti-monopoly investigation has become a default position in China," he said.

Foreign companies should be familiar with China's law, as it has its own terms, although these firms may have carried out antitrust practices in other countries for years, Huang said.

Xu Kunlin, head of the price supervision department at the National Development and Reform Commission, has announced a plan to recruit at least 170 employees for the antitrust law enforcement team as investigations are stepped up. About 20 will join his office in Beijing and the others will work in provincial branches nationwide.

Sebastien Evrard, antitrust partner at law firm Jones Day, said more Chinese companies can now see the benefits of relying on the antitrust law. He suggested that foreign companies should be more careful about their code of ethnics and with complying with local competition laws.

He said recent investigations show that the government is stepping up its efforts to enforce the Anti-Monopoly Law. However, it is still hard to say whether the increased enforcement action against foreign companies is because they are from overseas or because they are leaders in their sector.

A spokesman for Chrysler in China declined to comment.

Audi China and Mercedes-Benz said they were cooperating with the commission, Reuters reported.

Under the Anti-Monopoly Law, the commission can impose fines of between 1 and 10 percent of a company's revenue for the previous year.

Colin Liu, a lawyer in the automotive industry, said, "The NDRC would normally set a percentage of annual sales in relevant markets as fines, based on how cooperative the companies are."

Referring to the 12 Japanese auto companies investigated for suspected monopoly violation on parts pricing, Nissan said it had not been investigated as of Wednesday. Others, including Toyota, Mazda and Honda, declined to comment, Bloomberg reported.

Industry experts said automakers have too much leverage over car dealers and parts suppliers, enabling them to control prices, considered a violation of China's anti-trust laws.

Yale Zhang, managing director of the consultancy Automotive Foresight (Shanghai), said: "Monopolistic practices are rampant in the auto industry. The commission is first targeting imported luxury brands because the problem is most severe in this area."

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Li Jiabao and Reuters contributed to this story.

(China Daily 08/07/2014 page1)