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China plans close watch on pricing in six sectors

Updated: 2013-11-26 07:31
By Chen Jia ( China Daily)

China's top price regulator plans to ratchet up pressure against companies in six industries that engage in monopolistic pricing, said an official from the National Development and Reform Commission.

The sectors are aviation, consumer goods, vehicles, telecommunications, pharmaceutical products and home appliances, Lu Yanchun, an official of price supervision and anti-monopoly pricing at the commission, told the Xinhua News Agency.

Those industries are very close to residents' daily lives, and the NDRC's regulation will help to protect consumers and stimulate domestic consumption in a fair market environment, analysts said.

According to Lu, the NDRC is continually strengthening efforts to crack down on excessively high prices, based on a comprehensive anti-monopoly legal and regulatory system. It is also strongly supported by governments at the central and provincial levels.

Wang Tongsan, an economist with the Chinese Academy of Social Sciences, a central government think tank, suggested that the government should play a "proper" role in eliminating monopolies that drive up prices.

For general goods, the government's duty is to ensure fair competition in the market and crack down on illegal behaviors such as price fraud and gouging.

"The government should also have reserves to adjust supply when unexpected disasters happen in order to keep the market stable," Wang said.

"But for goods produced by monopoly industries, such as petroleum products and telecommunications, the government needs to diversify production and increase the number of suppliers to create an effective environment for market-oriented prices," he added.

In January, the NDRC announced new sanctions on foreign companies for the first time after years of investigations.

In one price-fixing case, six liquid crystal display producers, including two from South Korea and four from Taiwan, paid 353 million yuan ($57.5 million) in fines.

The NDRC also imposed fines of 670 million yuan, a record for anti-monopoly fines in China, against six baby formula companies - Biostime, Mead Johnson, Dumex, Abbott, Friesland and Fonterra.

Their commercial operations were said to be anti-competitive activities that violated the nation's laws against monopolies.

Huang Yong, a professor at the University of International Business and Economics in Beijing, said that the laws and regulations on monopolies should be more detailed and updated, as regulators have faced difficulties in enforcement.

"Part of the case review procedure needs to be simplified to improve the efficiency of investigations," he said. "A third-party hearing system should also be established as soon as possible to better protect consumers."