Submitted by: Eric White

A recent WSJ article ‘China Defends Price Fixing by Vitamin Makers’ discusses a case ‘recently cleared for trial’ whose result will have significant meaning to antitrust practices in international trade, namely China. In this specific case, the four Chinese vitamin manufacturers do not dispute that they acted together to set artificially high prices. They are, however, arguing that they did not break the law and China?s Ministry of Commerce is willing to back the price-fixing efforts of these companies. Apparently, China’s defense is based on a loophole of international law known as the doctrine of sovereign immunity. That is, ‘If a government orders a company to take a specific action, it generally is considered an act of state that can’t be prosecuted in foreign courts’.

After enacting domestic antitrust laws for the first time this year that restrict monopolistic practices including price fixing, one must wonder about the message China is trying to send. China is clearly acting in its own self-interest - trying to get the best of both worlds by establishing a market economy at home while ignoring those rules abroad.

After years of undercutting their competitors and gaining substantial market share, these vitamin companies, along with many other Chinese companies manufacturing everything from drugs to sweeteners to steelmaking materials collude to set artificially high prices. Could this be the international business strategy of China? Though most would consider it to be unethical, I have to admit that it is clever and it is working.

If this is China’s international business strategy, what does that mean to global consumers? Will they be forced to pay high prices? What does this mean to global manufacturers? If international antitrust rules don’t apply to China, how can they compete?