12 Japanese firms fined for price-fixing

Record fines expected to benefit vehicle manufacturers in China

China's antitrust authority Wednesday slapped record fines totaling 1.24 billion yuan ($201.8 million) on 12 Japanese auto parts and bearings producers for price manipulation, as the government intensifies efforts in the enforcement of the antitrust law.

Eight Japanese auto parts producers, including Denso Corp, Mitsubishi Electric Corp and Mitsuba Corp, were fined a total of 832 million yuan, according to a statement on the National Development and Reform Commission's (NDRC) website.

Four bearing makers, including NSK Ltd and NTN Corp, were fined 403 million yuan, the NDRC said.

The 12 companies were found to have colluded to reduce competition and get favorable prices for auto parts purchased by car manufacturers such as Honda, Toyota and Ford. The price-fixing has affected contracts in the Chinese market, according to the statement.

The price-fixing "improperly affected the prices of auto parts, bearings and vehicles in China and has hurt the interest of car manufacturers and consumers," the statement said.

Hitachi Automotive, a subsidiary of Hitachi Ltd, and bearings firm Nachi-Fujikoshi Corp were spared the fines as the two companies were the first to provide evidence to the NDRC, according to the statement.

All 12 companies have pledged to make rectifications in accordance with Chinese laws, the NDRC statement said.

"The move is expected to benefit car manufacturers, as they may get to purchase Japanese auto parts at lower prices," Zhang Yu, managing director at consultancy Automotive Foresight (Shanghai) Co, told the Global Times Wednesday, adding that the fines may deter further monopolistic behaviors in the auto industry.

China relies heavily on Japanese auto parts. In 2013, Japanese transmission parts accounted for 40-45 percent of China's total auto parts imports, Zeng Zhiling, a senior analyst at consultancy LMC Automotive, told the Global Times.

The NDRC's probes follow global investigations, including in the US and Europe, on price-fixing in the auto parts sector. In September 2013, nine Japanese auto parts suppliers, including Hitachi Automotive and Mitsuba, were ordered to pay fines totaling $740 million in the US.

Huang Yong, an antitrust law professor at the Beijing-based University of International Business and Economics, said that such behaviors, which hurt competition and do great harm to a fair market, are the foremost target for all antitrust authorities around the world.

Major carmakers such as Audi and Chrysler are also under antitrust investigations in China, as they may have overcharged on both auto parts and vehicle prices in China.

Recent media reports have found that prices of imported vehicles in China are much higher than their prices in the overseas market, excluding factors such as tariffs. Also, auto parts are overpriced, since the ratio of total price of all parts to the price of a new vehicle is over 1,000 percent in some cars, media reported, while experts noted that a 200-300 percent ratio is a rather reasonable level.

Leading automakers such as BMW, Audi, Toyota and Honda have all recently announced they will cut auto parts prices, in response to antitrust probes.

Vehicle prices of some automakers were also reduced. Jaguar Land Rover China said on July 25 that it would lower the prices of three models by an average of 200,000 yuan. BMW also announced earlier this month to offer discounts on some models.

The record fines come at a time when the country is stepping up efforts to bring companies into compliance with its Anti-monopoly Law, which took effect in 2008 and allows the authorities to impose a fine worth 1-10 percent of the company's sales of the previous year. US software giant Microsoft and chipmaker Qualcomm are also currently undergoing antitrust investigations.

Huang noted that the authorities' antitrust investigation is not intentionally targeting foreign firms, as Chinese companies, including State-owned ones, were also once the subject of antitrust probes.

China's high-end liquor producers Moutai and Wuliangye were fined 449 million yuan by the NDRC for pricing monopoly in 2013, and State-owned China Unicom and China Telecom were also targeted in the NDRC's antitrust investigation.

"Everyone is equal before the law. So it doesn't matter whether they are domestic or foreign firms, they will be punished as long as they violate laws," Li Pumin, secretary-general of the NDRC, said at a press conference in Beijing on Wednesday.