Shandong drug makers fined for price-fixing

PUBLISHED : Tuesday, 15 November, 2011, 12:00am
UPDATED : Tuesday, 15 November, 2011, 12:00am


Two pharmaceutical companies have been fined a total of more than seven million yuan (HK$8.57 million) for price-fixing, the first time the country's central planning agency has used its power under the anti-monopoly law to slap heavy fines on rule-breaking companies.

State media reported that the National Development and Reform Commission (NDRC) found that two pharmaceutical companies from Shandong province - Weifang Shuntong Pharmaceuticals and Weifang Xinhua Pharmaceutical Trading - were controlling the market for a drug ingredient and driving up the cost of making a blood pressure medicine that is included on the government's national drug list for sale at a retail price of eight fen a tablet.

The case came less than a week after the NDRC announced investigations into the country's two big state-owned telecoms companies for monopolising broadband services and price discrimination against competitors. The two companies, China Telecom and China Unicom, could face fines of up to several billion yuan if found guilty.

In June, each of the Shandong companies signed contracts with separate Liaoning manufacturers of promethazine hydrochloride - the base ingredient for making medicine to treat high blood pressure - and forbade the manufacturers from supplying the ingredient to a third party without their approval. The two Liaoning firms are the only two manufacturers of the ingredient on the mainland, Xinhua reported.

The NDRC fined Weifang Shuntong Pharmaceuticals 6.877 million yuan and Weifang Xinhua Pharmaceutical Trading 152,600 yuan for forcing downstream manufacturers to raise bidding prices and interfering with the drug bidding system.

Lawyer Wang Junlin, from the Yingke Law Firm, said these two cases suggest that the NDRC is ready to take more action to ensure fair competition. 'This is in line with market trends and is also a natural step after the commission passed two regulations on price-fixing at the end of last year that took effect in February,' Wang said. 'The antimonopoly law is relatively new but now the NDRC has detailed guidelines to base its action on.'

The anti-monopoly law was passed in 2007 and came into effect in August 2008. Under the law there are three government agencies responsible for enforcement: the Ministry of Commerce, the State Administration for Industry and Commerce, and the NDRC.

Previously, action taken by the Ministry of Commerce, which vets merger and acquisition cases - such as Coca-Cola's high-profile proposed purchase of Huiyuan - and the State Administration for Industry and Commerce, which targets anti-competitive practices created by administrative measures, had gained more publicity.

6.87m yuan

Weifang Shuntong Pharmaceuticals was fined this much, in yuan

- The fine for Weifang Xinhua Pharmaceutical Trading was 152,600 yuan