China’s NDRC Fines Optical Makers Over Resale Price Maintenance

June 1, 2014 at 8:12 pm

On May 29, 2014, China’s National Reform and Development Commission (“NDRC”), the country’s most important policy body, announced fines for five glasses and contact lenses makers after it found evidence of resale price maintenance (“RPM”) policies among the companies. The total fines levied to glasses makers Essilor, Zeiss, Nikon, and contact lenses makers Bausch & Lomb and Johnson & Johnson amounted to more than 19 million yuan (approximately $3.05 million),

The investigation found that the relevant companies have been fixing resale prices and holding a year-round “buy three get one free” promotion, which the NDRC said was a form of RPM. The companies were also found to have punished distributors that did not adhere to suggested resale prices, by deducting deposits, cancelling sales commissions, levying “fines,” stopping supplies and issuing threats.

In its announcement, NDRC said Essilor had been given a fine of CNY 8.79m, or 2% of its previous year’s sales, and that the company had “relatively strong price control power but [could] actively rectify its behavior”.

Nikon was fined CNY 1.68m, also 2% of its previous year’s sales, because the company “could not fully co-operate with the investigation but [had] actively rectified its behavior”, the NDRC said.

Zeiss, Bausch & Lomb and Johnson & Johnson were all fined 1% of their previous years’ sales – CNY 1.77m, CNY 3.69m and CNY 3.64m, respectively, because they had “actively co-operated with the investigation and actively rectified their behavior”.

Two more participants in the RPM, Hoya and Weicon, were exempted from fines because they had “proactively reported to the antitrust regulator the situation regarding monopoly agreements, provided important evidence and actively rectified their behavior”.

The NDRC said its investigation into the optical lens market was launched in August after it received whistleblower reports. Soon after, the targeted companies all took steps to rectify their behavior, including immediately stopping RPM, adjusting sales contracts, starting antitrust compliance training and reducing factory prices.

 

Mark Ye
202-589-1834
mye@dbmlawgroup.com