"There's a price law and they can order an investigation, looking at the possibility of price fixing."
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Washing powder shelves are empty in a Carrefour outlet in the city's Xinzhuang area yesterday, due to a buying rush following price-hike reports. [Photo: Shanghaidaily.com/Dong Jun]
The Shanghai municipal government's price watchdog has investigated price hikes for household and personal care products after reports of panic buying in local supermarkets last weekend.
The "Shanghai Daily" reported that frantic shoppers rushed to stores to buy bags of daily necessities following media reports about four leading consumer product suppliers increasing prices for goods sold in China. The report cited unidentified sources as saying that Procter & Gamble Co., Unilever NV, Liby Group Co. and Nice Group would increase product prices by 5 to 15 percent starting in April.
The four companies control about four-fifths of China's consumer product market share.
Business analysts said the price rise was caused by increasing oil prices, which is the main raw material used to produce household products.
Mark Hughes, executive business editor of "China Daily," told CRI that the entire industry had been affected by oil prices, while some small brands could benefit from the price wars between big companies as consumers searched for cheaper options.
"Everyone's suffering from the increase in oil prices, which is fundamental to why these prices are going up," Hughes said. "But smaller companies with lower labor costs can dive in and take that advantage" to sell products at lower prices.
In reaction to the product-buying rush, the Shanghai Commission of Commerce issued an urgent notice requiring supermarkets to ensure they had sufficient supplies to meet demand.
Meanwhile, the Shanghai Development and Reform Commission also started investigations to determine any potential price fixing.
China's Price Law forbids price fixing by fabricating news of potential price increases. Companies that collaborate with others to fix prices will face heavy punishments.
Hughes says price fixing has always been denied by some companies in China even though they have actually engaged in the practice. He also says it exists in market economies where producers are free to set their own rates. He added that authorities should take the issue seriously and probe any possible illegal activities.
"There's a price law, and they can order an investigation, looking at the possibility of price fixing, which I must emphasize has been denied by the relevant companies," Hughes said. "I think they will just ensure that the market determines who comes out best."
Two weeks ago, Spain fined some consumer goods firms, including Procter & Gamble, L'Oreal SA and Henkel AG, 50 million euros each for fixing prices over the last 20 years.