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New rules mulled for the auto industry

2014-08-21 08:11 China Daily Web Editor: Qin Dexing

12 Japanese suppliers fined a record $201 million for price manipulation

China is considering drafting new rules for the automotive industry on the basis of its Anti-Monopoly Law, according to an official at the nation's antitrust regulator.

He made the comment on Wednesday after 12 Japanese auto suppliers were fined a total of 1.24 billion yuan ($201 million) by the National Development and Reform Commission for manipulating prices.

The fine is the largest handed out by the antitrust regulator.

Xu Xinyu, an official at the commission's Price Supervision and Anti-Monopoly Bureau, said restrictions from automakers related to replacement parts in China had become extremely rigid and needed to be changed.

Xu said some car dealers had prevented auto parts from flowing freely, as in Europe or the United States, because automakers had set strict restrictions on prices, production quantities and the areas in which parts could be sold.

"We are not against franchise, but we are against abusing franchise," Xu said.

Vertical price-fixing-setting the lowest prices for items resold to third parties, also called resale price maintenance,-would be a major target for antitrust penalties, Xu added.

An official, who declined to be named, told China Daily the antitrust regulator is also considering building a mechanism for the auto industry that would guarantee a level playing field.

Most major global automakers, including General Motors, BMW, Volkswagen's Audi, Daimler's Mercedes-Benz, Tata Motors' Jaguar Land Rover, Fiat's Chrysler, Toyota and Honda, have been targeted in China's antitrust probes. Most have announced price cuts for vehicles or spare parts in the past two months.

Fines for FAW-Volkswagen's Audi division have yet to be announced.

Shen Jianjun, secretary-general of the China Automobile Dealers Association, said customers would benefit from the antitrust probes, which would inevitably bring more competition and lower prices.

Of the 12 Japanese companies involved, eight auto spare parts suppliers will be fined 831.96 million yuan, and four bearings suppliers will be fined 403.44 million yuan.

The commission said that from January 2000 to February 2010, the 12 Japanese firms, which included Hitachi and Denso, were found to have held bilateral and multilateral meetings to form horizontal-pricing agreements, which refers to concerted actions and agreements between actual and potential competitors, the most serious type of monopoly conduct.

Spare parts with fixed prices were used in more than 20 models of Honda, Toyota, Nissan, Suzuki and Ford cars, the commission said.

In July, Japanese automakers' combined market share continued to drop, to 15.43 percent of the total passenger vehicle sector, compared with more than 20 percent in 2012, according to the China Association of Automobile Manufactures.

Major Japanese automakers all saw sales decline, while China's passenger vehicle sector reported an 11.5 year-on-year sales growth during the low season.

"China's enforcement of the Anti-Monopoly Law is in line with international practice," said Deng Zhisong, an attorney at Dacheng Law Office in Beijing.

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