China's Anti-Monopoly Policies
By LARRY ROMANOFF – October 10, 2020
In 2014, due to repeated complaints and alarming suspicions, Chinese authorities undertook an enormous wide-ranging anti-monopoly investigation of the country's auto industry that involved more than 1,000 Chinese and foreign companies including automakers, dealers and suppliers, many of whom were suspected of collusion in price-fixing, price-gouging, other anti-competitive behavior, as well as fraudulent sales, service and warranty terms. A major thrust of the investigation was the illegal fixing of extremely high prices, a focus that would appear to have been well justified since, as soon as news of the investigation broke, dozens of foreign automakers simultaneously engaged in a panic reduction of their auto and parts prices, with Audi and Mercedes instituting reductions of as much as 40% and BMW doing something similar, perhaps hoping by this means to stave off criminal conviction. In fact, virtually all foreign automakers panicked and cut prices heavily when news of the probes became public, knowing full well the honeymoon of breaking all of China's laws with impunity was quickly coming to an end. From the China Daily:
"Jessica Su, antitrust scholar and Institute of American Studies associate professor at the Chinese Academy of Social Sciences, said the commission has strong evidence and a legal base to continue its investigations. In the new-car and after-sales markets, the conduct of international automakers may have infringed the antitrust law, including price-fixing, territorial restrictions and customer restrictions. In the after-sales car market, suspected conduct includes exclusive supply, exclusive purchase and excessive pricing of replacement parts, as well as restrictions on the supply of technical information needed for repair and maintenance, she said. "Such behavior mainly comes from car manufacturers suspected of substantially impeding competition and harming consumer welfare. If similar conduct occurred in the United States, European Union, Japan, South Korea and other mature market economies, it would doubtless trigger antitrust investigations".
