Hostname: page-component-cd9895bd7-q99xh Total loading time: 0 Render date: 2024-12-31T21:11:41.508Z Has data issue: false hasContentIssue false
  • English
  • Français

Strategic Public Shaming: Evidence from Chinese Antitrust Investigations

Published online by Cambridge University Press:  10 January 2019

Angela Huyue Zhang
Angela Huyue Zhang*
Affiliation:
University of Hong Kong and King's College London. Email: [email protected].
Get access Rights & Permissions [Opens in a new window]

Abstract

This article examines strategic public shaming, a novel form of regulatory tactics employed by the National Development and Reform Commission (NDRC) during its enforcement of the Anti-Monopoly Law. Based on analysis of media coverage and interview findings, the study finds that the way that the NDRC disclosed its investigation is highly strategic depending on the firm's co-operative attitude towards the investigation. Event studies further show that the NDRC's proactive disclosure resulted in significantly negative abnormal returns of the stock prices of the firm subject to the disclosure. For instance, Biostime, an infant-formula manufacturer investigated in 2013, experienced −22 per cent cumulative abnormal return in a three-day event window, resulting in a loss of market capitalization that is 27 times the antitrust fine that it ultimately received. The NDRC's strategic public shaming might therefore result in severe market sanctions that deter firms from defying the agency.

摘要

本文考察了国家发展和改革委员会（“发展和改革委员会”）在执行反垄断法过程中采用的一种新型监管策略 – 战略性的公众羞辱。根据对媒体报道和访谈结果的分析，作者发现国家发改委披露调查的方式是高度战略性的，取决于公司对调查的合作态度。事件研究进一步表明，国家发改委的积极披露导致受调查的公司股票价格有显著异常的负面收益。例如，2013 年受发改委调查的一家婴儿配方奶粉制造商合生元在三天内股价的累积显著异常的负面收益达到 22%，致使其市值的损失高达反垄断罚金的 27倍。这些研究表明国家发改委的战略性的公众羞辱策略可能导致被调查企业受到严厉的市场制裁，从而阻止了企业抵抗监管者。

Keywords

Chinareputationshamingantitrustcompetitionregulation中国声誉羞辱反垄断竞争监管
Type
Research Article
Information
The China Quarterly , Volume 237 , March 2019 , pp. 174 - 195
Check for updates
Copyright
Copyright © SOAS University of London 2019 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Aguzzoni, Luca, Langus, Gregor and Motta, Massimo. 2013. “The effect of EU antitrust investigations and fines on a firm's valuation.” Journal of Industrial Economics 61, 290.Google Scholar
Ang, Yuen Yuen, and Jia, Nan. 2014. “Perverse complementarity: political connections and the use of courts among private firms in China.” Journal of Politics 76, 318–332.Google Scholar
Beingmate. 2014. “Beiyinmei yingtong shipin gufen youxian gongsi 2013 niandu baogao” (Beingmate Annual Report 2013), http://www.cninfo.com.cn/finalpage/2014-04-09/63808286.PDF. Accessed 21 March 2017.Google Scholar
Bihua, Ye. 2013. “Fagaiwei shiyi huishi mianzao zhongfa: Shouxian jiangjia shuaixian rencuo” (NDRC explained why Wyeth got exemptions from penalties: Wyeth was the first one to reduce price), 8 August, http://finance.sina.com.cn/chanjing/gsnews/20130808/022816379184.shtml. Accessed 21 March 2017.Google Scholar
Biostime. 2014. “Heshengyuan guoji konggu youxian gongsi 2013 nianbao” (Biostime Annual Report 2013), https://prd-website-media.oss-cn-hongkong.aliyuncs.com/hhglobal/files/Fchi-20140402.pdf. Accessed 6 October 2018.Google Scholar
Bosch, Jean-Claude, and Eckard, E. Woodrow. 1991. “The profitability of price fixing: evidence from stock market reaction to federal indictments.” The Review of Economics and Statistics 73, 309–317.Google Scholar
Campbell, John Y., Lo, Andrew Wen-Chuan and MacKinlay, Archie Craig. 1996. The Econometrics of Financial Markets. New Jersey: Princeton University Press.Google Scholar
CCTV. 2011. “Zhongguo Dianxin Zhongguo Liantong shexian jiage longduan” (China Unicom and China Telecom are suspected of price monopolies), 21 November, http://www.china.com.cn/v/zhuanti/2011-11/21/content_23971018.htm. Accessed 20 March 2017.Google Scholar
European Chamber of Commerce. 2014. “European Chamber releases statement on China AML related investigations,” 13 August, http://www.europeanchamber.com.cn/en/press-releases/2132/european_chamber_releases_statement_on_china_aml_related_investigations. Accessed 6 October 2018.Google Scholar
Günster, Andrea, and van Dijk, Mathijs. 2016. “The impact of European antitrust policy: evidence from the stock market.” International Review of Law and Economics 46, 20–33.Google Scholar
Hu, Xiaohong. 2013. “Beiyinmei chenren zao fanlongduan diaocha” (Beingmate admitted that it was involved in antitrust investigation), 5 July, http://finance.sina.com.cn/stock/s/20130705/082816024813.shtml. Accessed 21 March 2017.Google Scholar
Key, Diana. 2016. “Analyzing the financials of Mead Johnson, a heavy hitter in pediatric nutrition,” http://marketrealist.com/2016/01/analyzing-financials-mead-johnson-heavy-hitter-pediatric-nutrition/. Accessed 21 March 2017.Google Scholar
Liebman, Benjamin L., and Milhaupt, Curtis J.. 2008. “Reputational sanctions in China's securities market.” Columbia Law Review 108, 929–983.Google Scholar
MacKinlay, Archie Craig. 1997. “Event studies in economics and finance.” Journal of Economic Literature 35, 13.Google Scholar
Martina, Michael, and Miller, Matthew. 2014. “‘Mr. Confession’ and his boss drive China's antitrust crusade.” Reuters, 15 September, http://www.reuters.com/article/us-china-antitrust-ndrc-insight-idUSKBN0HA27X20140915. Accessed 20 March 2017.Google Scholar
Mitchell, Tom. 2014. “China antitrust ruling blunts foreign criticisms.” Financial Times, http://www.ft.com/cms/s/0/61d3f8aa-28ff-11e4-9d5d-00144feabdc0.html#slide0. Accessed 21 March 2017.Google Scholar
NDRC. 2014. “Zhejiang baoxian hangye weifan fanlongduan fa beichu 1.1yiyuan fakuan” (The insurance industries were fined 110 million yuan by NDRC for antitrust violations), 2 September, http://www.ndrc.gov.cn/fzgggz/jgjdyfld/jjszhdt/201409/t20140902_624514.html. Accessed 20 March 2017.Google Scholar
Schelling, Tomas C. 1990. The Strategy of Conflict. Cambridge, Massachusetts: Harvard University Press.Google Scholar
Shapiro, Judith. 2017. “The evolving tactics of China's green movement.” In Sternfeld, Eva (ed.), Routledge Handbook of Environmental Policy in China. New York: Routledge, 52.Google Scholar
Stefan, Andreas. 2013. “Chinese milk powder case: how do we interpret a price cut upon an antitrust announcement,” https://competitionpolicy.wordpress.com/2013/07/16/chinese-milk-powder-case-how-should-we-interpret-a-price-cut-on-the-announcement-of-an-antitrust-investigation/. Accessed 21 March 2017.Google Scholar
US Chamber of Commerce. 2014. “Competing interests in China's competition law enforcement: China's anti-monopoly law application and the role of industrial policy,” 77–78, https://www.uschamber.com/sites/default/files/aml_final_090814_final_locked.pdf. Accessed 21 March 2017.Google Scholar
Van den Broek, Kemp Stijn, Ron, GM, Verschoor, Willem FC and De Vries, Anne-Claire. 2012. “Reputational penalties to firms in antitrust investigations.” Journal of Competition Law and Economics 8, 231–258.Google Scholar
Wan, Renmin. 2014. “Fagaiwei diaochu Shanghai jingjia chaozhong, she Laofengxiang Yuyuan,” (NDRC is investigating price fixing in gold retailing in Shanghai, Laofengxiang and Yuyuan were involved), 19 July, http://finance.people.com.cn/n/2013/0719/c1004-22245568.html. Accessed 21 March 2017.Google Scholar
Net, Xinhua. 2011. “Weiguan fanlongduan shou an” (Examining the first big antitrust case), http://tech.sina.com.cn/t/2011-11-11/19476309150.shtml. Accessed 21 March 2017.Google Scholar
Yu, Peter K. 2006. “From pirates to partners (Episode II): protecting intellectual property in post-WTO China.” American University Law Review 55 (4), 952–55.Google Scholar
Yuan, Jin. 2013. “Fagaiwei tan fanlongduan kunjing: you xiehui shanglai jiu paizhuozi” (NDRC discussed the difficulties of antitrust enforcements: Industry Association refused to cooperate), 27 August, http://www.nbd.com.cn/articles/2013-08-27/768536.html. Accessed 21 March 2017.Google Scholar
Yue, Yuan. 2011. “Fagaiwei zhi Dianxin Liantong shexian longduan, ying weiguan, gejie fanying buyi” (NDRC alleged China Telecom and China Unicom were monopolies, mixed feedback from different sides), 9 November, http://politics.people.com.cn/GB/16191006.html. Accessed 21 March 2017.Google Scholar
Zhang, Angela Huyue. 2014. “Bureaucratic politics and China's anti-monopoly law.” Cornell International Law Journal 47, 684.Google Scholar
Zhang, Angela Huyue. 2015. “Taming the Chinese Leviathan: is antitrust regulation a false hope?” Stanford Journal of International Law 51, 198–99, 218–221.Google Scholar
Zhang, Xingxiang. 2015. “China's anti-monopoly law enforcement: a quest for transparency, consistency, and fairness,” Indiana University Research Center for Chinese Politics and Business Working Paper 37.Google Scholar
Zhu, Jianhong. 2013. “Fagaiwei fanlongduan ju zhengzai diaocha duojia naifen qiye shexian jiage longdong” (NDRC's antitrust bureau is launching an antitrust investigation into milk powder companies suspected of price monopolies), 2 July, http://finance.people.com.cn/n/2013/0702/c1004-22039996.html. Accessed 21 March 2017.Google Scholar