China Briefing | Level the field but keep FDI in play

It is a summer of discontent for multinational companies on the mainland as regulators use the country's six-year-old antitrust law to go after foreign car and tech companies for alleged anti-competitive behaviour.

The authorities are investigating Audi, BMW and Mercedes-Benz - which together account for about 80 per cent of the mainland's luxury car sales - over the cost of spare parts, while agents have also raided offices of US tech firms such as Qualcomm and Microsoft.

Last week, one regulator, the National Development and Reform Commission, levied a record 1.24 billion yuan (HK$1.56 billion) combined fine against 10 Japanese car parts and bearings makers for antitrust activities. Now some state media are touting even bigger fines for companies like Audi.

All firms under the spotlight have said they are cooperating with investigators. Audi, BMW and Mercedes-Benz have also announced sharp cuts in the prices of spare parts.

But the unprecedented application of the antitrust law has raised concerns that multinational companies are being unfairly targeted to help local businesses. Some cynical analysts have gone so far as to say that the effort is yet more proof of the government's change in attitude towards foreign direct investment (FDI), which helped make the country the world's second-largest economy.

Mainland officials have said they enforce the law equally and that domestic companies were also fined. For example, state-owned alcohol companies Kweichow Moutai and Wuliangye Yibin were found guilty of requiring retailers to charge a minimum price for their premium liquors.