China's pricing regulator says probing spectacle makers, not autos

BEIJING Mon Sep 16, 2013 9:51am BST

Car dealers and customers walk at a second-hand car market near a newly-built residential area in Hefei, Anhui province, January 26, 2013. REUTERS/Stringer

Car dealers and customers walk at a second-hand car market near a newly-built residential area in Hefei, Anhui province, January 26, 2013.

Credit: Reuters/Stringer

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BEIJING (Reuters) - China's pricing regulator is investigating industries where excessive profits are being made such as eyeglasses, an antitrust official said on Monday, adding that authorities have not opened any probe into the auto industry.

Lawyers in China say client enquiries related to a five-year old anti-monopoly law have jumped in recent months in the wake of a spate of antitrust investigations across sectors ranging from pharmaceuticals to milk powder and jewellery.

Last month a Chinese automotive association said it was collecting data on the price of all foreign cars sold in the country for the National Development and Reform Commission (NDRC), which regulates prices.

But Xu Kunlin, head of the NDRC's anti-monopoly bureau, told a panel at an antitrust forum in Beijing that the agency had "not selected the auto industry for investigation".

"We hope that our investigations will bring prices down in industries in which they are high," said Xu, instead singling out the cost of glasses frames and lenses, which he said were "many times higher" in China, without giving specific examples.

"I can reveal to everyone today that we are currently investigating spectacles. Actually, the investigation has proceeded smoothly. The relevant companies have all made admissions," Xu said without naming any firms.

Xu did not respond when the panel moderator - Huang Yong, a well-known legal scholar at China's University of International Business and Economics - noted that Xu's comments did not mean the NDRC would not investigate the auto industry in the future.

The official Xinhua news agency has said foreign carmakers were reaping exorbitant profits selling imported luxury cars in China and should face an antitrust investigation.

China has become a key market for luxury carmakers, with 2.7 million expected to be sold each year by 2020, overtaking the United States as the world's leader in the segment.

VIOLATIONS WILL BE INVESTIGATED

Xu defended his agency's practices against what some lawyers have said is the targeting of foreign firms, saying state-owned enterprises, Chinese and foreign companies had all complained that they were being singled out by the agency.

"We don't have a concept in our minds about who we are targeting. So long as there is a violation of the law, it will be investigated," Xu said.

The NDRC has launched nearly 20 pricing-related probes into domestic and foreign firms in the last three years, according to official media reports and research published by law firms.

In particular, authorities are paying attention to whether manufacturers are forcing retailers to set minimum prices for products, which would contravene the anti-monopoly law.

Some antitrust experts argue foreign companies have been more vulnerable to regulators since they lack domestic political backing.

Reuters reported on August 21 that an NDRC official put pressure on some 30 foreign firms at a meeting in late July to confess to any antitrust violations and warned them against hiring external lawyers to fight accusations from regulators.

"We come across a lot of companies, especially Chinese companies and our domestic lawyers, who don't understand <antitrust law>, so our communication with them can be very difficult," Xu said.

"So we very much welcome companies to invite external lawyers to participate in the case investigation."

(Editing by Dean Yates)

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