Chinese distillers fined 449m yuan for price-fixing

Baijiu makers Moutai, Wuliangye first domestic giants to be punished in antimonopoly blitz

PUBLISHED : Wednesday, 20 February, 2013, 12:00am
UPDATED : Wednesday, 20 February, 2013, 5:24am

The mainland's top liquor makers, Kweichow Moutai and Wuliangye Yibin, have been fined 449 million yuan (HK$558 million) for breaking price monopoly rules, as the government gets tough on anticompetitive practices.

The two firms admitted on their official websites earlier that they had violated antimonopoly laws by charging penalties to distributors who sold their baijiu alcohol products at lower prices than the producers had required.

The National Development and Reform Commission started an investigation last month.

The agency recently handed down the penalty, which was equivalent to about 1 per cent of the companies' combined revenue last year, the official China National Radio said on Tuesday.

Kweichow Moutai and Wuliangye Yibin are the first two leading domestic firms to be subjected to such fines since the antimonopoly laws came into effect five years ago.

An NDRC spokesman said last night he needed to verify the report before commenting on it.

Wei Shilin, the secretary general of the Beijing Lawyers Association's antitrust committee, said: "It's apparent that the government is wielding an iron hand to hit the monopoly practices in the market.

"There's no doubt we will see more names of leading companies in different industries on the authorities' investigation list."

Last month, the NDRC fined South Korean firms Samsung Electronics and LG and four Taiwanese companies a total of 353 million yuan for manipulating the prices of liquid crystal display panels on the mainland.

In November 2011, the agency said China Telecom and China Unicom, the nation's two major internet access providers, were under investigation for deterring competitors from entering the market.

The two telecommunication companies submitted an application to NDRC in December to halt the investigation and promised to lower their service charges.

Wei said the NDRC hired more than 70 officers last year to beef up the enforcement of antimonopoly laws.

"Generally speaking, most foreign enterprises are quite cautious about the relevant rules when doing business in China. However, many Chinese companies are ignorant or careless in this area," he said.

Moutai and Wuliangye's products, mostly priced between 1,000 yuan and 2,000 yuan a bottle, are among the most popular gifts during the traditional Chinese festivals, and their prices have climbed sharply in recent years.

But sales of the high-end liquor have been hit hard over the past few months as a result of the central government's crackdown on officials' extravagant consumption paid for with public funds.