Record antitrust penalties imposed in China

Published On 19/01/2013 | By Danielle Healey | Cartels, Enforcement

On 4 January 2013, the National Development and Reform Commission (NDRC), the agency responsible for price-related non-merger antimonopoly enforcement in China, imposed record antitrust fines totalling RMB 353 million (USD 56 million) on six international liquid crystal display (LCD) manufacturers for their participation in a cartel to manipulate the price of LCD panels in China.  The LCD cartel, comprising Korean companies Samsung and LG and Taiwanese companies AU Optronics, Chunghwa Picture Tubes, Chimei InnoLux and Hannstar, met almost monthly from 2001 to 2006 to exchange market information and to fix the price of LCDs sold in China.  During the 6 years of the cartel’s operations, more than 5 million LCD panels were sold by the cartel’s participants in mainland China, making an illegal gain of RMB 208 million (USD 33 million).

The NDRC fined the six companies RMB 144 million (USD 22.9 million), ordered the companies to pay back RMB 172 million (USD 27.7 million) to Chinese television makers damaged by the cartel and confiscated RMB 36.75 million (USD 5.8 million) of the illegal gains.  In addition to the financial penalties, the LCD manufacturers committed to strictly observe Chinese laws, to fairly supply Chinese TV manufacturers with new technologies in a non-discriminatory manner and to extend the warranties for LCD panels sold in China from 18 months to 36 months.

This is the first time that the NDRC has acted against a multinational cartel, following similar investigations in other jurisdictions.  Whilst the penalties are by far the highest financial penalties ever imposed by the NDRC, they are significantly lower than those imposed by competition authorities in the United States and Europe.  The NDRC’s official statement indicated that it had been lenient because all 6 companies had voluntarily confessed to their illegal activities and co-operated with the investigations.  In addition, the LCD cartel was investigated under the 1998 Price Law, rather than the newer 2008 Anti-Monopoly Law (AML), because the cartel conduct took place before the AML came into effect.  Fines under the AML would have been significantly higher.

While Samsung received full immunity from fines in Europe (as it was “first through the door” with its leniency application), it nevertheless received the second highest fine imposed by the NDRC of RMB 101 million because immunity in other jurisdictions does not guarantee protection in China.

For more detailed analysis and commentary on the decision, see the post by Susan Ning and Kate Peng over on our China Law Insight page.

Photo credit: jurvetson / Foter.com / CC BY

 

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