China’s cartel crackdown sends litigation signal

the move after seeing rivals reap rewards from cut-down tablets.

Another battle for the soul of Apple looms. Traditionally, the company has remained an avowedly upmarket innovator. But there is fierce internal debate over whether to change tack and launch a cheaper version of the iPhone.

Again Cook is looking enviously at the likes of Samsung and LG, another South Korean giant. They are selling millions of cheap smartphones in China and he wants a share of the spoils.

Samsung last week identified a ‘‘silver lining’’ in emerging markets, which it aims to exploit. In developed economies, where Apple dominates, demand would ‘‘decelerate’’ as the market reached saturation levels, it said.

Other decisions have also raised eyebrows in Silicon Valley. Last year Cook sacked Scott Forstall, a close ally of Jobs and the brains behind the iOS software that powers the iPhone and iPad. Once considered a contender for the post of chief executive, Forstall was forced to carry the can for last year’s maps fiasco, when Apple ditched Google’s slick location finder for an inferior home-grown service. Was it a show of strength by Cook, or a sign of weakness?

The internal wrangling cements the impression that Apple has lost focus.

One leading telecoms executive, who spends hundreds of million of pounds a year with Apple, said the company had always been a ‘‘nightmare’’ to deal with because of its determination to retain control over every aspect of the sales and marketing of its devices.

‘‘Jobs was a megalomaniac but at least you knew what to expect. Since he left, the decision-making has become more chaotic and confused,’’ the executive said.

Indecision has also bedevilled Apple’s long-rumoured move into televisions. Cook stated that the company’s interest in the market had become more serious than a ‘‘hobby’’.

Reports from Asia indicate it is experimenting with set designs to bring the world of video streaming and the internet on to the sofa. Yet Cook has also been trying to cut deals with US cable companies for a revamped Apple set-top box.

Clarity is needed. Cook needs a hit of his own to dispel the concerns over Apple’s future – and his leadership. CHINA HAS joined US and European regulators in a crackdown on some of the world’s biggest liquid crystal display panel makers, signalling that Beijing is now a force to be reckoned with in fighting global cartels.

The National Development and Reform Commission, China’s economic planning agency, which is also in charge of price-related monopoly issues, fined six South Korean and Taiwanese companies, including Samsung SDI, LG and Chimei Optoelectronics, 353 million yuan for fixing prices between 2001 and 2006.

The penalties are tiny compared with the US$3.8 billion US and European regulators have slapped on suppliers of flat-screen television components – including some of the panel makers implicated in the Chinese probe – and the prison sentences that US courts have handed down to industry executives since investigations began in 2006.

But legal experts say the case has great significance because it marks the first time Beijing has acted against an international cartel.

‘‘This is opening the floodgates in bringing global cartel cases to Chinese regulators along with those in the US and elsewhere,’’ said Sebastien Evrard, a partner at law firm Jones Day in Beijing.

An investigation into a move by Unilever to raise detergent prices last year, which triggered panic buying, had been Beijing’s only probe of a multinational company on price-related grounds – and that did not include price-fixing accusations.

According to the NDRC, the latest crackdown was started at the request of Chinese customers of the foreign display makers, who complained to the regulator that the manufacturers had admitted price fixing in investigations abroad.

Chinese regulators have been flexing their muscles of late and have been increasingly involved in approving cross-border merger and acquisition deals since Beijing’s adoption of an antimonopoly law in 2008. Even in deals between two companies from other countries, Chinese regulators now often have a say because of the impact on the world’s second-biggest economy.

In the LCD cartel case, Beijing ruled on the basis of the domestic pricing law because the pricefixing behaviour in question happened before the antimonopoly law took effect.

An NDRC official said: ‘‘If handled under the anti-monopoly law, the fines would have been much higher.’’

The anti-monopoly law calls for companies found guilty of price fixing to be fined 1 to 10 per cent of turnover. Under the domestic pricing law, the fines are set at five times the illegal gains.

Internationally, most probes into price fixing are triggered by one company filing for leniency – a request for forgiveness in exchange for providing evidence against others involved.

Antitrust experts said that although Chinese law includes the concept of leniency, companies had been reluctant to make such filings because it does not offer a guarantee and there was no precedent.

‘‘Now, however, the NDRC has proved that it will act against global cartels, so the message to foreign companies is: if you don’t file for leniency with China, someone else will,’’ said Evrard.

The NDRC said the companies had ‘‘turned themselves in’’, and the fines had been set in accordance with their degree of co-operation with the investigation.

The regulator said that it had fined LG and Samsung 100 million yuan; Chimei, which is now part of Innolux, 94 million yuan; AU Optronics 22 million yuan; Chunghwa Picture Tubes 16 million yuan, and HannStar Display 240,000 yuan. Of this, 172 million was money the companies overcharged Chinese customers and had already been repaid, the regulator said.

Samsung SDI said that since the Chinese move followed similar actions in other countries, it had no fresh stance other than to emphasise efforts made by the company to strengthen its compliance system since 2005.

LG said it did not expect the decision to harm its relationship with customers or its display sales.

Innolux, which acquired Chimei in 2010, said it regretted the result of the probe and added that it had already prepared funds to cover the fine and did not expect that it would adversely affect its operations.