Exclusive: Tough-talking China pricing regulator sought confessions from foreign firms

Wed Aug 21, 2013 8:41am EDT
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By Michael Martina

BEIJING (Reuters) - A senior Chinese official put pressure on around 30 foreign firms including General Electric and Siemens at a recent meeting to confess to any antitrust violations and warned them against using external lawyers to fight accusations from regulators, sources said.

The meeting is evidence of what many antitrust lawyers in China see as increasingly aggressive tactics to enforce a 2008 anti-monopoly law and highlight a worsening relationship between foreign companies and China's array of regulators.

Two sources who were at the July 24-25 closed-door meeting said the senior official showed in-house lawyers how to write what they called "self-criticisms" and displayed copies of letters from companies admitting guilt in past antitrust cases. Lawyers employed by some of those firms were in the room.

The two sources, and another source with direct knowledge of the meeting at a small hotel in Beijing, said the official who delivered the blunt remarks was Xu Xinyu, a division chief at the National Development and Reform Commission (NDRC).

One of the sources at the meeting said Xu noted, without being specific, that half of the companies in the room were either being investigated or had been probed by the NDRC. "The message was: if you put up a fight, I could double or triple your fines. This speech went way over the line," the second source who attended the meeting told Reuters.

The NDRC did not respond to questions from Reuters. Xu could not be reached for comment.

The agency has been at the forefront of a wave of investigations into how companies do business in China, especially into whether they effectively force retailers to sell their products at a minimum price.

On August 7 it announced fines totaling a record $110 million against five foreign milk powder firms and one Chinese producer for price fixing and anti-competitive behavior. Three other milk powder makers were investigated but not fined because, among other things, they carried out "self-rectification", the NDRC said at the time.   Continued...

The national flag of China flutters behind a fence of the headquarters of the National Development and Reform Commission (NDRC) in Beijing, in this picture taken July 12, 2013. REUTERS/Kim Kyung-Hoon