Nearly US$300m in fines just the start for China's anti-monopoly work

Want China Times, Staff Reporter 2014-10-26

Qualcomm's company logo. (File photo/CFP)

From Microsoft to Qualcomm, Audi to Mercedes Benz, China's anti-monopoly moves have issued penalties worth nearly 1.8 billion yuan (US$294 million) so far this year, while calls for ensuring fair competition in the market are getting stronger and stronger, the Beijing-based Economic Information Daily reports.

The next stage of the anti-monopoly campaign will focus on breaking administrative monopolies, including manipulating administrative power to exclude competition and local protectionism. Experts expect a more fair and orderly market environment in China in the future, following the implementation of the anti-monopoly law.

The world has been paying close to attention to how China has been managing monopolies since the campaign started in 2013. The first stage targeted monopoly agreements (vertical monopoly), the concentration of undertakings that restrict competition (horizontal monopoly) and the abuse of a dominant market position.

The vertical monopoly refers to upstream and downstream operators in the same industry having reached agreements to exclude or restrict competition. For example, in the auto market, car suppliers have issued policies or notices to restrict and define the minimum resale price, as well having fixed the resale price and taken other unilateral measures.

Horizontal monopoly refers to agreements reached among competitors, a tactic much harder to detect and break. Enterprises in the same industry may agree to jointly set prices through meetings and regional alliances.

Targets of fines include Japanese car parts enterprises, which got slammed with 1.24 billion yuan (US$202 million) in August, and fines on Zhejiang's insurers for 110 million yuan (US$18 million) in September.

Chen Fengying, director of the Institute of World Economic Studies at the China Institutes of Contemporary International Relations, expects the nation's anti-monopoly investigations to deepen further, expanding to wider ranges and gaining more authority.

Since China's implementation involves foreign multinational companies, some foreign media have raised queries over its fairness. Premier Li Keqiang at the World Economic Forum (WEF) in Davos this year replied that among the companies being investigated for anti-monopoly, foreign enterprises accounted for only 10%, a number he described as fair. China's implementation of anti-monopoly probes will make China further expand its openings, allowing more foreign funds and foreign products willing to enter the nation.

Anti-monopoly probes follow international standards, aiming to ensure fair competition in the market and upgrade economic efficiency, said an expert.