NDRC Demands More Concrete Pledges from China Telecom

By Susan Ning, Sun Yiming, Liu Jia and Yin Ranran

On December 13, it was reported that the National Development and Reform Commission (NDRC) asked China Telecom to submit more detailed "rectification proposal" in relation to its pledge for suspension of antitrust probe¹.   Earlier on December 2, China Telecom and China Unicom announced that they have applied to the NDRC for suspension of its antitrust investigation into their internet access pricing practices, by promising to adjust the internet access prices and overhaul their broadband services (see our article entitled "China Telecom and China Unicom Seek to Settle Antitrust Probe").

According to the report, the NDRC is not satisfied with China Telecom’s current proposal because it is "too vague and too difficult to monitor".  The NDRC required China Telecom to specify more details in its commitments such as the extent and timelines of its proposed bandwidth expansion and price reduction.  The detailed plans were required to be disclosed to the public for supervision. 

The NDRC appears to be uncompromising in this investigation of the two large SOEs.  In fact, after the previous Department of Price Supervision of the NDRC was renamed in August as the Price Supervision and Anti-monopoly Bureau and restructured to include three divisions dedicated to antitrust enforcement, the NDRC has been actively pursuing after companies for price-related monopolistic conducts².   The three divisions are: the First Division of Anti-price-related Monopoly Investigation, the Second Division of Anti-price-related Monopoly Investigation and the Division of Competition Policy.  The total number of officials was increased from 26 to 46. 

The local price administration agencies have also been undergoing similar restructuring in an effort to intensify antitrust enforcement.  In September, the previous Guangdong Provincial Price Bureau was officially renamed as the Guangdong Price Supervision and Inspection and Anti-monopoly Bureau with more officials recruited to beef up antitrust enforcement forces (see our article entitled "Guangdong Provincial Price Bureau Renamed, Reflecting Strengthened Antitrust Enforcement Authority"). 

¹NDRC Investigation Ongoing, China Telecom Likely to Release More Detailed Proposal This Week, Economic Observer, December 13, 2011, available at http://www.eeo.com.cn/2011/1213/217897.shtml.

²Last month, the NDRC fined two domestic pharmaceutical companies for abusing their dominant positions in the promethazine hydrochloride market. Please refer to our previous article entitled "NDRC Fined Two Pharmaceutical Companies for Abusive Conducts".