Dr. Gregory Leonard Comments in Kyodo News
China’s anti-monopoly regulatory agency in charge of price-related conduct, the National Development and Reform Commission (NDRC), has launched a series of antitrust investigations in the auto industry over the past few months. It has been reported that more than 1,000 car makers, part suppliers, and auto dealers are under investigation for horizontal cartel behavior or vertical pricing restraints.
In a Kyodo News article on August 16, 2014, Dr. Gregory K. Leonard discusses the rationale behind the wide scope of NDRC’s investigations in the auto industry and possible causes of high prices of cars and car parts in China. Dr. Leonard explains that the wide scope of the investigations might be due to the fact that “the practices that the NDRC is condemning (e.g., vertical pricing) are practiced industry-wide, so they have to go after all firms in the industry to be fair."
Regarding the higher prices for cars and car parts in China than in many other countries, Dr. Leonard cautions that there is nothing "inherently problematic" with a company charging more for a product in one country than it does in another. In the case of cars and car parts, it may reflect the higher costs of operation in China and in particular the substantial taxes and import duties.