By Susan Ning and Yin Ranran
On 2 April 2011, the National Development and Reform Commission (NDRC) hosted a conference with 17 industry associations (relating to businesses selling major consumer products such as household electrical appliances, food, beverages and dairy products) in Beijing. Specifically, the NDRC’s Price Department and Economic and Trade Department convened the conference as an effort to address the recent price hikes in commodities (see our articles entitledPrice Hikes for Washing Powders, Soaps and Shampoos Expected in April and Businesses Should Be Cautious in Making Advance Price Increase Announcement ).
The NDRC hosted conference was also regarded as an effort of NDRC to address China’s increasing consumer price index (CPI) – which is a major indication of the rate of increase of inflation in China. According to data released by the National Bureau of Statistics on April 15, China’s CPI rose 5.4% in March 2011 (from a year ago), hitting a 32-month high.
According to Mr. Wangjun Zhou, Deputy Director of the Price Department of NDRC, the main purpose of the conference was to "prevent potential illegal acts aimed at inflating the prices of commodities". According to Zhou, while the government respects the right of the businesses to set prices for the products they sell, businesses should not collude to raise prices, or make advance price increase announcements to "disrupt" the normal market order. After this conference, various industry associations have announced that they have requested their member enterprises to commit not to fabricate and spreading price increase information, increase the prices of commodities excessively, collude to raise prices or abuse their market powers to manipulate prices, etc.
The NDRC is the primary agency in charge of administering the Price Law (PL) as well as price-related breaches of the Anti-Monopoly Law (AML). The objective of the PL is (amongst other things) to maintain a socialist economy as well as to protect consumer interests. To ensure these objectives are met, the PL prohibits colluding to manipulate market prices, fabricating and spreading news of price increases to drive up prices, seeking exorbitant profits in violation of laws and regulations, etc. The objective of the AML is to maintain competition for the benefit of consumers. To ensure these objectives are met, the AML prohibits different types of conduct including cartel arrangements and abuse of dominance.
Since 2007, the NDRC has the statutory authority, pursuant to the Measures on Price Supervision and Administration by means of Reminder and Warning (Measures), to take various actions allowed under the Measures to either remind or warn the relevant stakeholders when it sees that the market price hikes or is going to hike or that the market fluctuates severely in terms of the prices of commodities. In addition to holding such talks, the NDRC and other pricing authorities may also, pursuant to the Measures, issue warning or reminders, in relation to price hikes or severe market fluctuations.
It is note-worthy that NDRC has been very active recently in terms of exercising its authority to enforce both the PL and the price-related aspects of the AML. We will continue to monitor its moves to see what action it will take next in these respects.