Unilever fined over rumors of price rises
By Feng Jianmin |
May 7, 2011, Saturday
|
Print Edition
Print Edition
UNILEVER China has been fined 2 million yuan (US$308,000) for "seriously distorting market order" by talking to the media about potential price rises, China's top planning agency said yesterday.
The National Development and Reform Commission said the company's comments about price rises in March had "intensified inflationary expectations among consumers" and caused panic buying of personal and household care products.
Unilever was found to have ordered retailers to increase prices from April 1, while managers from the company had been telling the media since March 21 that "prices of personal care products have entered an upward cycle," a statement from the NDRC, China's top economic planner and price regulator, said.
"Unilever's misinformation led consumers to expect massive price increases and caused sales of Unilever products to soar," the commission said. "Some supermarkets reported sales of Unilever products 10 times what they would normally be."
The commission accused the company of "seriously" violating China's price laws and decided to impose a fine of 2 million yuan "with leniency" after taking into consideration that the company had dropped its price rise plans in early April.
Shanghai-based Unilever China issued a brief statement shortly after the punishment was announced, saying Unilever "respects" the decision.
It is the second time this year Unilever has been fined for price issues. Last month, the European Commission fined Unilever and Procter & Gamble a total of 315 million euros (US$456 million) for fixing washing powder prices in eight European countries.
Some web users hailed the NDRC decision as protecting consumers' rights while others were concerned that companies would find other ways to raise prices. "They may instead reduce the contents of products" was one comment.
Unilever's brands in China include Dove and Lux personal hygiene products, Lipton tea and Omo washing detergent.
According to figures reported to the NDRC by Unilever, its brands had a market share of 12 percent for shampoo, 12.6 percent for body wash products and 15.2 percent for detergent in 2010.
Tingyi (Cayman Islands) Holding Corp, China's leading instant noodle producer, was also warned by the NDRC to suspend its plans to raise wholesale prices for its noodles on April 1.
"All companies, those with majority market shares and great influence within the industry in particular, must learn a lesson (from the Unilever case)," the NDRC said. All operators should create a normal market pricing system to stabilize prices, it said.
The National Development and Reform Commission said the company's comments about price rises in March had "intensified inflationary expectations among consumers" and caused panic buying of personal and household care products.
Unilever was found to have ordered retailers to increase prices from April 1, while managers from the company had been telling the media since March 21 that "prices of personal care products have entered an upward cycle," a statement from the NDRC, China's top economic planner and price regulator, said.
"Unilever's misinformation led consumers to expect massive price increases and caused sales of Unilever products to soar," the commission said. "Some supermarkets reported sales of Unilever products 10 times what they would normally be."
The commission accused the company of "seriously" violating China's price laws and decided to impose a fine of 2 million yuan "with leniency" after taking into consideration that the company had dropped its price rise plans in early April.
Shanghai-based Unilever China issued a brief statement shortly after the punishment was announced, saying Unilever "respects" the decision.
It is the second time this year Unilever has been fined for price issues. Last month, the European Commission fined Unilever and Procter & Gamble a total of 315 million euros (US$456 million) for fixing washing powder prices in eight European countries.
Some web users hailed the NDRC decision as protecting consumers' rights while others were concerned that companies would find other ways to raise prices. "They may instead reduce the contents of products" was one comment.
Unilever's brands in China include Dove and Lux personal hygiene products, Lipton tea and Omo washing detergent.
According to figures reported to the NDRC by Unilever, its brands had a market share of 12 percent for shampoo, 12.6 percent for body wash products and 15.2 percent for detergent in 2010.
Tingyi (Cayman Islands) Holding Corp, China's leading instant noodle producer, was also warned by the NDRC to suspend its plans to raise wholesale prices for its noodles on April 1.
"All companies, those with majority market shares and great influence within the industry in particular, must learn a lesson (from the Unilever case)," the NDRC said. All operators should create a normal market pricing system to stabilize prices, it said.
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