More market players needed to crack cartel activity

As reported yesterday, China's top economic planning body has imposed fines of 353 million yuan, or about 56 million U.S. dollars on six South Korean and Taiwanese companies. The fines are for the pricing-fixing of liquid crystal display panels sold in mainland markets. It's the first time China has brought a case against cartels based abroad. Foreign trade experts say it's a sign that China's anti-trust law is reaching international standards, which will help ensure fairer competition in the domestic market.

Samsung says in an e-mailed statement to CCTVNEWS that it had affirmed the facts of the investigation launched by the National Development and Reform Commission last September. Samsung says it put a stop to its cartel activities back in 2005, and was making positive efforts to create a fair competition environment.

This is the latest from one of the six LCD panel makers fined by the NDRC. The investigation into price fixing found that Samsung, LG and four other companies had held 53 meetings between 2001 and 2006 to fix the price of flat panels supplied to the Chinese mainland. The NDRC says such price fixing activities harm the interests of other LCD panel suppliers as well as consumers.

The six companies have been ordered to pay 144 million yuan in fines and repay 172 million yuan for the extra payment and charges to Chinese mainland buyers. The government also confiscated around 37 million yuan of illegal profits.

The fines imposed by China's top economic planning body are the latest levied by governments around the world over the sane price-fixing deal. In late 2011, the six companies paid around 600 million US dollars to settle similar claims.

Mei Xinyu, a researcher with China's Ministry of Commerce, says NDRC's move marks a step forward in protecting China's market competition. And most importantly, Mei says, China's anti-trust law has been strengthened.

"Enforcing anti-trust law is an effective way of protecting the market from cartel activities. But only a few countries in the world can take advantage of this law, as the cost of exercising extra-territorial jurisdiction is high."

TV manufacturers on the mainland are strongly reliant on LCD panel imports, as the core technology of LCD production is owned by major LCD panel suppliers in South Korea, Japan, or Taiwan.

Experts say in the effort to maintain fair market competition in the future, such investigations and anti-trust law can only cure the symptoms, not the root of the problem.

Mei Xinyu also said, "A solution to the problem is that more market players with self-innovated technologies join the market, so that the market share held by the major players is diluted, and they'll have less opportunity to determine the price of products."

The price fixing ring, in this case, came to light as a result of a US Justice Department investigation and has prompted authorities in several countries to impose fines on the six companies. In 2010, the European Commission levied a fine of 649 million euros, or 848 million US dollars, on the six companies for engaging in anti-competition practices.