European firms express concern over China antitrust probes

BEIJING Wed Aug 13, 2014 6:17am EDT

BEIJING Aug 13 (Reuters) - The European Union Chamber of Commerce in China on Wednesday expressed concern over a recent series of antitrust investigations, saying China was using strong-arm tactics and appeared to be unfairly targeting foreign firms.

An array of industries have been coming under the spotlight as China intensifies efforts to bring companies into compliance with an anti-monopoly law enacted in 2008.

The auto sector has been under particular scrutiny, and the National Development and Reform Commission (NDRC), China's state planner, has been investigating it amid accusations by state media that global car makers are overcharging consumers.

European car brands including Volkswagen AG's Audi, BMW and Mercedes-Benz are scrambling to lower prices for new cars and spare parts in an effort to appease Chinese regulators who have accused some of them of anti-competitive behaviour.

The European Chamber said that while effective enforcement of the anti-monopoly law would help develop a "healthy market economy" in China, it was concerned about the way investigations were being carried out.

"Inspections must not prejudge the outcome of the investigation and full rights of defence must be afforded to the companies in question. Disconcertingly, the European Chamber is not convinced that this has systematically been the case in China's recent investigations," it said in a statement.

"The European Chamber has received numerous alarming anecdotal accounts from a number of sectors that administrative intimidation tactics are being used to impel companies to accept punishments and remedies without full hearings," it said.

"Practices such as informing companies not to challenge the investigations, bring lawyers to hearings or involve their respective governments or chambers of commerce are contrary to best practices," it said.

European business are also increasingly wondering whether foreign companies are being disproportionately targeted, said the chamber, which has more than 1,800 member companies in China.

"In some of the industries under investigation, domestic companies have not been targeted for similar violations. Furthermore, in some cases that involve joint ventures, it has only been the foreign partner that has been named as being a party to the investigations," it said.

The NDRC did not answer telephone calls seeking comment.

Chinese authorities say the law is applied to both domestic and foreign firms, with the aim of protecting consumers. The NDRC has said it has targeted domestic telecoms companies, including China Unicom and China Telecom Corp, and domestic financial institutions for anti-trust practices.

U.S. companies have also been caught up in the investigations, including software giant Microsoft Corp , and chipmaker Qualcomm Inc which faces the prospect of a $1 billion fine.

Such investigations have rekindled concerns that the Chinese government may be using the anti-monopoly law to support domestic firms at the expense of foreign companies. (Reporting by Ben Blanchard; Editing by Robert Birsel)

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