Penalty sends a message about fair playing field

By Lin Xu Source:Global Times Published: 2013-1-7 9:03:40

Heavy fines were levied on South Korean electronics makers Samsung and LG as well as four Taiwanese manufacturers on Friday by China's National Development and Reform Commission (NDRC).

According to the NDRC, these enterprises formed price-fixing alliances many times between 2001 and 2006, in order to fix the price of liquid crystal display panels sold to China. They have been fined a total amount of 353 million yuan ($56 million).

China's first ever enforcement action against foreign companies for cartel behavior received different reactions from home and abroad.

Korean media on Saturday warned that it would be a burden to foreign enterprises' operations in China, while many Chinese said that the government was too soft on those foreign enterprises who violated the law and the fines on them were not enough.

Compared to an earlier fine of $1.215 billion on the six enterprises for manipulating prices by the US and the $856 million fine imposed by the European Commission, China's penalty was smaller. There is still a big gap between China and those Western countries in anti-monopoly efforts. However, the message is clear that China is getting tough on foreign companies which engage in unfair trade practices.

With the development of China's economy, especially after its entry into the World Trade Organization, China has issued relevant laws and regulations to regulate foreign enterprises' behavior, ensure competition and punish violations of commercial laws.

The era when foreign enterprises enjoyed preferential policies is over. Foreign enterprises are increasingly being treated as equal players.

Foreign companies have been calling for China to establish a legal framework to ensure a level playing field for competition and often complain of an unfair competitive environment. But cases involving foreign companies violating local laws are not rare, including many multinationals.

From an international perspective, developed market economies are decisive and tough in cracking down on law-breaking actions, like monopolistic behavior.

This will be the trend in China as it engages itself further in the international economic system. To develop in China and make legal profits, foreign enterprises must adapt to the trend and obey the market rules of China.

China should further complete its legal system and learn to make use of rules that will allow it to punish the illegal business practices used by some foreign companies.



Posted in: Observer

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