12 Japanese suppliers facing $200 million in fines in China

Article by Christian A., on August 22, 2014

Twelve Japanese suppliers in China were found by National Development and Reform Commission guilty of price fixing and are now facing a record CHY1.24 billion ($200 million) in fines. NDRC said in a statement on its Web site that it has found eight Japanese auto-parts makers and four bearings manufacturers guilty of collusive behavior.

Among the 12, Sumitomo Electric Industries Ltd. and Yazaki Corp. were given the heaviest fines. The probe into the suppliers were part of a larger investigation into pricing practices in the auto industry, which has prompted at least seven carmakers to trim prices while there is a rising concern that China is picking on foreign companies on its soil.

The suppliers fined by NDRC include Denso Corp., Aisan Industry Co., NSK Ltd., Hitachi Automotive Systems Ltd., Mitsubishi Electric Corp., Mitsuba Corp., Furukawa Electric Co., Nachi-Fujikoshi Corp., Jtekt Corp. and NTN Corp.

Authorities in the United States and Europe have also launched separate antitrust probes against several Japanese auto suppliers. For instance, NGK Spark Plug recently agreed to pay a $52.1 million in fines while pleading guilty to a felony charge for its role in fixing the prices of spark plugs and other components in the US.

Investigations in the countries, which have already spanned several years, have prompted 28 companies and 26 executives pleading guilty or agreeing to plead guilty in the probe. They also agreed to pay $2.4 billion in criminal fines, according to the Justice Department said Tuesday.

Akira Moriwaki, the chief representative in Shanghai at the law firm of Anderson Mori & Tomotsune, quipped that the NDRC “used to be a sleeping tiger," adding that after accumulating experience, the agency’s antitrust probes targeting foreign companies will only grow in number from now on.

Under China’s anti-monopoly law, the NDRC is empowered to impose fines equivalent to between one percent and 10 percent of a company's revenues for the previous year. Colin Liu, a lawyer in the auto industry, remarked the amount of fines set by NDRC usually depends on how cooperative the companies under probe are.

Effective August 1, 2014, Jaguar Land Rover trimmed the prices of its three models -- Ranger Rover 5.0 V8, Ranger Rover Sport 5.0 V8 and Jaguar F-Type Cabriolet -- in China after the government launched its anti-monopoly probe. The models saw their prices slashed by an average of CHY200,000 ($32,300).

According to Jaguar Land Rover, because of the importance of China, it immediately set up a process to review its pricing, and has decided to voluntarily cut the price of the models. The carmaker said the move would boost its competitiveness and increase its market share in China.

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Topics: china

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