On 4 January 2013, the NDRC issued a hefty penalty totaling RMB353 million (about USD56 million) against six foreign LCD monitor manufacturers, which include RMB101 million (about USD15.9 million) for Samsung; RMB118 million (about USD18.7 million) for LG; RMB94 million (about USD14.9 million) for Chi Mei Corporation; RMB21.9 million (about USD3.5 million) for AU Optronics; RMB16.2 million (about USD2.6 million) for Chunghwa Picture Tubes; and RMB240,000 (about USD38,000) for HannStar Display Corp.
The NDRC accused these six companies of a conspiracy to suppress and eliminate competition by agreeing to fix prices of LCD monitors sold to Chinese color TV manufacturers. According to the NDRC, Samsung, LG, and four other Taiwan companies "conspired" in a price fixing scheme facilitated through monthly meetings between 2001 and 2006. During that period, the six companies held 53 "Crystal Conferences" where they allegedly colluded on LCD monitor pricing for the mainland Chinese market. These display screen suppliers "manipulated market prices and damaged the lawful interests of other companies and consumers," said in an NDRC statement.
In its decision, the NDRC ordered the six companies to pay back the additional money earned to China's television manufacturing industry due to the fixed price. Of the penalty of RMB353 million, RMB172 million has been returned to nine domestic major television manufacturer including TCL, Skyworth, Konka, and Changhong.
The price fixing scheme came to light as a result of the investigations against these six companies carried out by the enforcement authorities in the US and the EU. In 2010, the European Commission issued a penalty of Euro 649 million for the same charge on these six firms. The US Department of Justice completed its investigation in September 2012, as a result of which a penalty of over USD1 billion was handed down to these six firms, and nine senior executives of three companies were put into prison.
Comments
This penalty issued by the NDRC is the highest amount so far for price-related violations in China. As the price conspiracy happened between 2001 and 2006, but China's Anti-trust law only took effect in 2008, NDRC's decision was made based on Price Law, instead of Anti-trust Law, which is the reason why compared with the EU and the US, the penalty for the same charge imposed on the same six companies is much lower in China. If a similar case happens again, one can expect that the NDRC will refer to the Anti-trust Law as the legal basis to regulate price-fixing cartels, in which case the fines will significantly increase.
The six companies fined by the NDRC are all foreign companies. According to the NDRC, the investigations carried out by foreign anti-trust authorities against these six companies served as a very useful reference for its investigation. Anti-trust enforcement authorities around the world are strengthening their cooperation and information sharing, which may lead to a more consistent enforcement of anti-trust law from a global perspective. Thus, it is becoming increasingly important for multinational companies to have a robust global anti-trust compliance programme to guide employee's behavior in all key jurisdictions in which they operate.
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