BEIJING Aug 7 China's recent probes into
Microsoft Corp and car companies including Audi and
Chrysler have rekindled concerns that Beijing may be using an
anti-monopoly law to support domestic firms at the expense of
On Wednesday, the State Administration for Industry and
Commerce (SAIC) conducted its second round of raids against
Microsoft, including for the first time its financial services
provider Accenture Plc.
Another anti-trust regulator, the National Development and
Reform Commission (NDRC) also said on Wednesday it would punish
Volkswagen AG's Audi unit and Chrysler, owned by
Fiat SpA, after an ongoing investigation showed they
had engaged in monopoly practices.
Chinese regulators have in the past few years intensified
their enforcement of the six-year-old anti-monopoly law, which
stipulates fines of between 1 and 10 percent of a company's
revenues for the previous year for anti-competitive practices.
In addition to the SAIC and the NDRC, the Ministry of
Commerce (MOFCOM) is also tasked with enforcing the law, which
is still relatively new. In some cases, officials are required
to consider industrial policy.
Legal experts point out that the authorities appear to have
wielded the law against more foreign multinationals than local
companies. The firms targeted include Mead Johnson Nutrition Co
and Danone SA, which the regulator slapped
with hefty fines, as well as U.S. chipmaker Qualcomm Inc
which faces the prospect of a $1 billion fine.
"A significant proportion of the high profile cases appear
to involve big foreign firms," said Mark Williams, an anti-trust
expert and professor at University of Melbourne Law School.
"Critical observers have suggested that this gives the
appearance that the AML is being used to discipline new entrants
to the China market." The AML is the anti-monopoly law.
In April, the U.S. Chamber of Commerce sent a private letter
to Secretary of State John Kerry and Treasury Secretary Jacob
Lew urging Washington to get tough with Beijing since
enforcement of the anti-monopoly law was being used to pursue
"China's industrial policy goals".
"It has become increasingly clear that the Chinese
government has seized on using the AML to promote Chinese
producer welfare and to advance industrial policies that nurture
domestic enterprises, rather than the internationally accepted
norm of using competition law to protect consumer welfare and
competition," the letter said.
The 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 local telecoms companies, including
China Unicom and China Telecom Corp, and
local financial institutions for anti-trust practices.
"The NDRC gives equal treatment to all market participants,"
Xu Kunlin, director general of NDRC's price supervision and
anti-monopoly bureau, told Reuters recently.
"Those who have been penalized include state-owned
enterprises, private companies, and foreign-owned enterprises,
and industry associations," he said, adding that the law was
"to protect market order and fair competition".
The NDRC's investigation into the auto industry followed
domestic media complaints that foreign carmakers were
overcharging Chinese customers for vehicles and spare parts. The
probes spurred Audi and Mercedes-Benz, which is owned by Daimler
AG, to lower their spare part prices in China.
"Monopolistic practices are quite rampant in the auto
industry. NDRC is first targeting imported luxury brands because
the problem is most severe in this area," said Yale Zhang,
managing director of consultancy Automotive Foresight (Shanghai)
(Editing by Miral Fahmy)