YANG JIAN

Why China's NDRC has become country's antitrust watchdog

Yang Jian is managing editor of Automotive News China.Yang Jian is managing editor of Automotive News China.
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Until recently, the National Development and Reform Commission, a ministry-level government body, was very friendly toward foreign automakers, approving numerous factory projects the companies sought.

But lately it has begun investigating global automakers for suspected monopolistic behavior.

What prompted the about-face?

The commission suddenly feels it has to justify its existence by transforming itself from the nation's central economic agency into an anti-monopoly regulator.

Until now, the commission was the central government's most powerful body. It was formed in 1952, three years after the communists took power in China, to run the country's Stalinist economy.

For a long time, the commission, initially known as the State Planning Commission, dictated what would be produced in China and how the products should be priced.

China launched economic reforms in 1978. Since then, the government gradually has left the level of output and pricing of all consumer goods and most industrial products up to the market's producers.

But the commission retained its power to approve new industrial projects, including factories to assemble cars and light trucks.

The situation changed after new leaders assumed power in China last year. Under President Xi Jinping and Premier Li Keqiang, the Chinese government has taken a series of steps to deregulate government control of the domestic economy in a bid to shore up growth.

To date, the government has released several batches of industrial projects that no longer need the commission's approval. Those projects cover an array of industries, including transportation, power generation and telecommunications.

The measures have chipped away at the commission's power base and threatened its existence. So the commission gradually has shifted its oversight role.

After probing pharmaceutical, electronics and other industries and subjecting multinational companies such as Mead Johnson Nutrition and Danone to hefty fines in recent months, it is casting its eyes on the auto industry.

The commission recently has investigated several global automakers, including BMW, Daimler, Audi, Jaguar Land Rover and Chrysler. In response, the companies have cut prices on new vehicles or replacement parts, benefiting consumers.

Last week, a commission spokesman told journalists that Chrysler and Audi have violated China's anti-monopoly law. Audi said Tuesday it has accepted its penalty. The spokesman said the commission also has finished probes of 12 Japanese auto companies, including parts suppliers, for monopolistic practices and will soon mete out fines.

Which automaker will be the next target for the commission's anti-monopoly task force?

It could be any company, thanks to loopholes in China's rule regulating auto sales.

Enacted in 2004, the rule grants automakers virtually full autonomy to decide which spare parts their dealerships may sell and how much they can charge.

Taking advantage of the problematic rule, many automakers have overcharged customers for spare parts, according to market research completed in April by China's insurance industry association and an auto repair and maintenance association. The report's findings are bad news for automakers.

But they give the commission plenty of opportunities to prove its worth as a new-found guardian of consumers' pocket books.

You can reach Yang Jian at yangjian@autonewschina.com.

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