U.S. ruling on Chinese vitamin C producers unfair

A United States court ruling to fine Chinese vitamin C producers for alleged price fixing is both unfair and inappropriate, China's Ministry of Commerce (MOC) said Tuesday.

The Brooklyn Federal Court ruled Thursday that the North China Pharmaceutical Group Corp. and its affiliate Hebei Welcome Pharmaceutical Co., Ltd. must pay 162 million U.S. dollars in fines for colluding to raise prices for vitamin C exports to the U.S. market.

MOC spokesman Shen Danyang told a press conference that companies have been operating in line with domestic laws and regulations, and are implementing compulsory requirements imposed by the government.

Vitamin C is an essential nutrient for humans and certain other animal species, making it an important ingredient for food, drugs, and feedstuff.

Since the turn of the century, the country's vitamin C production expanded to become a major supplier in the global market.

However, excessive production capacity became a chronic problem for the sector, leading the government to take measures to address the issue.

In March 2011, the National Development and Reform Commission and the Ministry of Industry and Information Technology jointly released a circular aiming to curb the sector's overcapacity and achieve healthy development.

The circular set a maximum vitamin C production volume of 100,000 tonnes for 2011 and prohibited local authorities from approving the construction of new production capacity.

The U.S. ruling marked the first time for a Chinese pharmaceutical company to be fined in a U.S. antitrust court case.

Shen said the MOC briefed the U.S. court in the form of amicus curiae, or "friend of the court," on three occasions to clarify that the Chinese companies involved had acted according to industrial policies.

Such briefs are filed by parties not involved in a case but who believe the court ruling may affect their interests.

"It is totally inappropriate for the U.S. court to impose a massive penalty based on legitimate activities of Chinese companies," Shen said.

The U.S. ruling is in violation of both the principle of international comity and the spirit of the rule of law, Shen said.

If this wrong decision is not addressed, the international community will have concerns, and eventually rising disputes may in turn hurt the interests of the United States, Shen said.

The U.S. court should take into full consideration the facts of the case and the special situation, which is that China is in a stage of economic reforms and structural transformation, according to Shen.

"China will continue to give firm support for Chinese companies to safeguard their legitimate interests by lawful means," Shen said.

North China Pharmaceutical Group, or NCPG, said Saturday that it would appeal the fines after receiving the official verdict from the U.S. federal court.

Zhang Baorui, president of the Hebei Pharmaceutical Profession Association, said overcapacity in recent years has led to continuous falls in vitamin C prices.

"Domestic producers of vitamin C competed fiercely with one another for survival, so it is not likely for them to collude to manipulate prices," Zhang said.

North China Pharmaceutical Co. Ltd., a listed branch of the NCPG, dropped 6.89 percent on Monday in Shanghai stock exchange, while it edged up 0.34 percent on Tuesday.