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August 13, 2013

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5 Shanghai jewelers fined for fixing prices

Five Shanghai-based gold and jewelry stores and a local trade association have been fined a combined total of 10.59 million yuan (US$1.72 million) for manipulating the prices of their jewelry, China’s top economic planner said yesterday.

Shanghai Laofengxiang Co Ltd, Shanghai Laomiao Gold Co Ltd, First Asia Jewelry, Chenghuang Jewelry and Tianbao Longfeng were fined a combined total of 10.09 million yuan, or 1 percent of their 2012 revenues.

The Shanghai Gold & Jewelry Trade Association, which was said to have played a leading role in formulating and executing a monopoly agreement, was fined 500,000 yuan, the maximum fine possible for this type of offense, the National Development and Reform Commission said.

Xu Kunlin, director of the commission’s Price Supervision and Anti-Monopoly Bureau, told China Central Television that the companies were not heavily punished because of their initiative in halting illegal activities ahead of an investigation, their active cooperation, and their commitment to putting matters right.

Fines for price manipulation can amount to 10 percent of annual sales, under China’s anti-trust laws.

Investigations by local pricing authorities found the five stores had manipulated the retail prices of their gold and platinum jewelry in accordance with a pricing scheme created in cooperation with the trade association.

Their practices harmed the legitimate interests of other business operators and consumers, the commission said.

The trade association had organized several meetings of member companies to develop “rules of price discipline” that outlined how retail prices should be calculated and the range that prices could fluctuate, CCTV said yesterday.

Investigators found that the prices charged by the five jewelers fell within the calculated range. They also showed a level of consistency in price adjustments.

Neither the association nor any of the companies could be reached for comment yesterday.

The punishments mark the latest move by the price watchdog in probing monopolistic behavior in China.

Last week, China fined six infant formula producers — Mead Johnson and Abbott from the US; Dumex, a subsidiary of France’s Danone; a China arm of Royal FrieslandCampina of the Netherlands; New Zealand’s Fonterra and China’s Biostime — a total of 668.8 million yuan for price-fixing. The commission announced the fines after a five-month investigation.

Unlike the jewelry case where the range of retail prices was determined by the trade association, the infant formula makers maintained high milk powder prices on their own by setting minimum prices with distributors and punishing dealers who did not comply, according to the watchdog.

The fines were equivalent to 3-6 percent of their sales last year.

Earlier this month, Johnson & Johnson was ordered to pay 530,000 yuan as compensation to a Beijing dealer over price manipulation.



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