China’s NDRC Probes Old Veteran Jewellery Stores in Shanghai; Lao Fengxiang may have to uncouple some 250 million- 2.5 billion yuan from its profits for fines

July 24, 2013 Leave a comment

China’s NDRC Probes Old Veteran Jewellery Stores in Shanghai

07-23 16:19 Caijing

Lao Fengxiang may have to uncouple some 250 million- 2.5 billion yuan from its profits for fines.

Following a sweep on baby formula makers and parametrical giants, the powerful National Development and Reform Commission accused gold jewellery association, Lao Fengxiang (600612.SH) and other famous jeweler stores in Shanghai of fixing prices in the latest antitrust probe. The companies under investigation could face a large sum of fine, if proves to be true, analysts say, at risk of eroding profits that have accumulated in years. Companies fixing prices in the market can be delivered a penalty equivalent to 1 percent of one year sales at the least, and 10 percent of one year sales at the most, under Chinese laws.Authorizes remain undecided in whether the Shanghai association and the jewelers are corning the market and fixing prices of jewellery, but there is evidence that Lao Fengxiang and its rivals have reached monopoly agreements, which is against the country’s laws.

Jewellery stores including Lao Fengxiang and Yuyuan have already confessed to antitrust organs about their wrongdoings, the Economic Observers reported, saying “the companies have colluded with each other to fix prices, damaging consumers’ interests.”

Lao Fengxiang recorded a sale of roughly 25 billion yuan in 2012, which means the company may have to uncouple some 250 million- 2.5 billion yuan for fines.

The company posted some 391 million yuan in net profit in the first half, compared with a full-year profit of 611 million in 2012.

Shares of Lao Fegnxiang slumped 3.47 percent with an intra-day tumble of over 5 percent. Shanghai Yuyuan Tourist Mart (600655) fell 1.79 percent on Monday.

Earlier this year, local high-brand liquid Moutai and Wuliangye Yibin were fined by the NDRC 247 million yuan and 202 million yuan, respectively, for fixing prices.

Filed under Macro Trends

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