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New monopoly rules 'will not impact ore'

By Li Jing (China Daily)
Updated: 2009-08-14 09:09

China's newly unveiled draft regulations aimed at ending monopolistic price-fixing may not apply to ongoing negotiations between foreign iron ore producers and Chinese companies, an insider said yesterday.

The draft rules, issued by the National Development and Reform Commission (NDRC), are aimed at preventing collusion among retailers and both domestic and international industry associations.

The provisional document calls for an end to "monopolistic price agreements" that come about when "operators in a competitive relationship" fix or alter prices, restrict the extent of price shifts or "use a uniform price as the basis for negotiations with a third party".

Some commentators have suggested the draft is aimed at negotiations between China's steel industry and Australian iron ore producers.

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But an expert from the China Price Association, who contributed to research work for drafting the regulations, told China Daily that the relatively high price offered by Australian mining companies did not impact competition on China's domestic iron ore market.

"Even though they (the Australian producers) may have made agreements about price ahead of negotiations with China, their behavior did not eliminate or limit the competition in China's domestic iron ore market," said the source, who refused to be named.

"Therefore, the regulation may not apply in this case."

The regulations will apply when overseas producers collude to drive up the price within China, if that collusion produces an "exclusionary or restrictive impact on the domestic market".

According to the draft, monopolies could face punishment for trying to control prices, dump products at below-cost prices, and sell products at "unfairly high prices" or if they buy at "unfairly low prices".

Individual retailers or producers could face the confiscation of their illegal earnings and a fine of up to 10 percent of their previous-year's sales. Industry associations could face a fine of up to 500,000 yuan and be disbanded.