On January 4, 2013, the National Development and Reform Commission (NDRC), China’s antitrust regulator with jurisdiction to investigate and deal with price-related monopolistic conduct, announced its first settlement with foreign companies charged with price fixing. As part of the settlement, Samsung, LG, and four Taiwanese firms were fined 353 million yuan (US$56.6 million) for setting the price of liquid crystal display (LCD) panels during the 2001-2006 period in violation of China’s 1997 Price Law. The settlement marks the first time that China’s NDRC has punished non-Chinese firms for price-fixing conduct.
The NDRC reportedly began its investigation of the LCD industry in late 2006 after receiving multiple complaints from several Chinese television manufacturers and the China Video Industry Association. A major break in the investigation came when AU Optronics, a Taiwanese manufacturer of LCD panels, decided to cooperate with the NDRC and self-reported its monopolistic activities and those of the five other companies. Soon thereafter, LG and Innolux Corporation, another Taiwanese manufacturer, followed suit. AU Optronics’s fines were waived as a result of its cooperation.
The NDRC has stated in press reports that had the conduct occurred after 2008 when China’s new Anti-Monopoly Law took effect, the penalties imposed would have been much higher. Under the new law, the NDRC can confiscate the illegal gains and impose a fine of up to 10% of the firm’s sales revenues from the previous year. In the LCD case, under the old law, fines were capped at five times the illegal proceeds or less. To date, the new Anti-Monopoly Law has reportedly been applied only against domestic companies, but not foreign firms.
Generally, multinational corporations operating in China are faced with a complicated antitrust regime with three antitrust laws in effect (Anti-Unfair Competition Law of 1993, Price Law of 1997, and Anti-Monopoly Law of 2008) as well as three government agencies responsible for various aspects of competition compliance and enforcement. Moreover, Chinese regulators have now signed formal memoranda of understanding with cartel enforcers in the United States, the United Kingdom, and Korea, the idea being that a flow of information among antitrust officials will make investigations by each regime more successful. In the LCD industry alone, investigations were carried out by regulators in the United States, Europe, Korea, and China, all of which led to various levels of penalties.