China FlagAntitrust can be difficult to navigate for credit managers and sales staff alike, especially when doing business internationally. The Chinese government is lending credibility to such beliefs as it seems to be lashing out at companies in various industries, most noticeably the important auto-parts supply chain.

In recent days, China’s National Development Reform Commission began targeting automotive parts manufacturers from Japan to the European Union to the United States, alleging mass breaches of antitrust law via price fixing. The worst of it to date seems to have fallen on Japanese manufacturers. A fine total exceeding $200 million (USD) was levied upon various competitors from Japan during the most recent round of enforcement. The highest individual fine for alleged price manipulation of parts in the supply chain went to Sumitomo Electric Industries.

The best known brand name to be hit in recent days for alleged antitrust violations was European pace-setter Mercedes-Benz, owned by Daimler AG. Those alleged violations were tied to both parts pricing and high maintenance costs in China.

It remains to be seen how far Chinese regulators will go: if they are targeting just a few key industries in the short term or if they are testing the waters for more widespread crackdowns on the argument that it is protecting its consumers. Enforcement, just or otherwise, has escalated noticeably since China revamped its antitrust statutes late last decade.

Courtesy Brian Shappell, CBA, CICP, NACM staff writer

BIIA Comment:  Anti-Trust laws are relatively new in China and as such it is not surprising that regulators start to show their muscle.  The key question is when do regulators start to focus on the services industry such as accounting, insurance, media and business information.