Gold group probed for price fixing

Two Chinese jewelry giants announced Saturday that the country's price supervision and anti-monopoly agency is investigating the Shanghai Gold & Jewelry Trade Association (­GJTAS), which media reported is suspected of helping stores fix gold retail prices in Shanghai.

The People's Daily Online news portal reported Friday that several gold jewelry retailers including Shanghai Lao Fengxiang, Yuyuan Tourist Mart and Chow Tai Fook have submitted reports to the Shanghai Price Supervision and Anti-­Monopoly Bureau admitting that they collaborated to manipulate retail prices of gold jewelry products, which damaged the interests of consumers.

Lao Fengxiang Co reposted the media report in its announcement without confirming or denying it, and said the company will disclose further information after the investigation into the GJTAS has been completed by the Bureau of Price Supervision and Anti-Monopoly under the National Development and Reform Commission.

Yuyuan Tourist Mart, which has two gold jewelry stores reportedly under investigation, also published a similar announcement.

The GJTAS has come under investigation as a major driving force of the price-fixing scheme since the association sets a flat price for all its member gold stores, which are allowed to vary their gold prices by only 3 percent above or below the GJTAS price standard, according to the news portal.

According to China's anti-­monopoly law, business dealers with competitive relationships should not propose agreements to set or alter prices together, and industry associations should also refrain from organizing businesses to fix prices.

Although the association's price guidelines have been prohibited by local governments since 2011, insiders were quoted by the news portal as saying that most of the gold stores in Shanghai still follow the guidelines.

The GJTAS could not be reached by press time Sunday.

Many of the gold jewelry stores in Shanghai are members of the GJTAS and pay membership fees to the association, "which of course sets up a flat price to protect its members' interests," an insider who is considering opening a branch of his gold jewelry store in Shanghai told the Global Times Sunday, speaking anony­mously.

Membership fees in the GJTAS range from 1,200 yuan ($195) per year for the lowest-level membership to 60,000 yuan for the highest, according to the association's website.

The gold jewelry market in Shanghai is markedly different from the markets in other cities. In Beijing, for instance, all gold jewelry stores set their own product prices based on the international gold price.

"The price gap between different stores can be as high as 20 yuan per gram due to factors such as their brand recognition and location," Jiao Guangyi, deputy general manager of the All Love All Life gold store in Beijing, told the Global Times Sunday.

A lawyer was quoted by the Securities Daily as saying Sunday that gold jewelry stores found guilty of price manipulation could be fined up to 10 percent of their annual sales volume.