Hebei Province under antitrust investigation

Local govt agency accused of adopting discriminatory policy on toll fees

Hebei's policy to reduce toll fees by half for local transport companies was a "misinterpretation" of the government's rules and the local government will apply uniform fees to both local and non-local vehicles, officials at local government agencies in North China's Hebei Province said Saturday, in response to an ongoing antitrust investigation.

"The State Council had previously issued documents to allow local vehicles to enjoy preferential policies, so we decided to charge only half of the toll fee to local vehicles," an official surnamed Cui at Hebei Provincial Price Bureau was quoted by Beijing News as saying Saturday.

Hebei may have misread the State Council's rules when issuing the policy, Cui and another official at Hebei Provincial Transportation Department said in the report.

The two officials said they had submitted plans to rectify the practice and resume using the same rate for both local and non-local vehicles, according to the report.

Xu Kunlin, head of the anti-monopoly bureau of the National Development and Reform Commission (NDRC), said at a press briefing on Thursday that according to a tip-off by the South Korean Embassy in China, Hebei reduced the toll fee by half for local transport firms whereas a Sino-South Korea joint venture in Tianjin could not enjoy the preferential fee.

Xu said Hebei government agencies were suspected of implementing discriminatory policies by charging only half of the toll fee to local vehicles, and the NDRC had informed the province to correct the practice.

Calls to Hebei Provincial Transportation Department went unanswered on Sunday and a staff member at Hebei Provincial Price Bureau said she was unaware of the case. Efforts to reach South Korean Embassy failed on Sunday.

The central government only authorized local governments to reassess the toll rate and charge local vehicles by category but did not permit local governments to issue preferential policies for local vehicles, the Beijing News report said, citing relevant government regulations.

"The investigation of Hebei local government marks a significant progress in the enforcement of the country's antitrust law and is the first such case publicly announced by the NDRC," Huang Yong, a professor of antitrust law at the University of International Business and Economics, told the Global Times Sunday.

According to Huang, although investigations of economic monopoly targeting business entities have become the norm in China, investigations of administrative monopoly targeting government agencies have just started and should be further enforced to prevent the agencies from limiting market competition.

Administrative monopoly is a by-product of China's planned economy in which the State controlled or "monopolized" almost all aspects of the economy. Promulgated in 2008, China's Anti-Monopoly Law prohibits government agencies and entities from abusing administrative power to issue policies to restrict competition.

The focus of antitrust investigation in the next stage will be shifting to abuse of administrative power, competitive exclusion and local protectionism. Hebei's case is just a beginning, Xu from the NDRC was quoted by news portal sina.com.cn as saying Saturday.

China has stepped up enforcement of antitrust rules recently and launched a series of high-profile anti-monopoly investigations into foreign firms, including Microsoft and Qualcomm. The probes have caused anxiety among foreign companies over whether the probes are unduly targeting foreign firms.

"China has investigated domestic firms for monopolistic behavior for a long time. The key to dispel foreign firms' suspicion of being targeted is to be completely transparent in disclosing the information including the name of the entities and amount of fines," He Weiwen, co-director of the China-US/EU Study Center at the China Association of International Trade, told the Global Times Sunday.

"It will be more convincing to foreign firms if China extends the antitrust investigation to local governments, government agencies as well as State-owned enterprises," He said.