Messaging app WeChat becoming a new tool for China’s antitrust enforcement

31 January 2017 9:56am

August 15 2016. By MLex staff.

China’s popular messaging app WeChat is increasingly becoming an important tool for the country’s antitrust regulators to tackle complex cases and gather evidence on the exchange of price information, as illustrated by the latest case involving vertical restraints by Chinese home appliance giant Haier, which resulted in a fine of 12 million yuan ($1.86 million).

On Aug.12, the Shanghai branch of the National Development and Reform Commission, or NDRC, published the full text of the penalty decisions it imposed on three sales subsidiaries of Haier for engaging in resale price maintenance, or RPM, and the role played by WeChat in that probe was notable.

The regulator said it gathered evidence of the three companies requiring their distributors to implement the RPM agreements in WeChat groups. In addition to sales policies, financial records, receipts, email records, and interview records, WeChat screenshots are also now regarded as evidence, according to the penalty decision.

“The case clearly shows that WeChat and WeChat groups have come under the investigation search scope of Chinese antitrust enforcement agencies,” said Wei Shilin, a partner at Dentons in China.

This is not the first time that Chinese regulators have looked into WeChat in their forensic research into potential antitrust violations.

In April, the NDRC’s Shaanxi bureau fined 31 motor vehicle inspection-services suppliers a total of 5.76 million yuan for price fixing. The regulator revealed for the first time that investigators found the companies exchanged information about their planned joint price hike in a WeChat group, before holding face-to-face meetings regarding the cartel.

In July, the NDRC’s Jiangsu bureau fined six chemical companies a total of 3.81 million yuan for colluding to fix the price of chlorophenols, an ingredient used in pharmaceuticals and pesticides. Antitrust officials found evidence from their email records, chat records from Wechat and QQ, another popular messaging app, as well as sales contracts and financial invoices.

WeChat is a popular mobile messaging app developed by the Chinese technology giant Tencent. It currently has 762 million monthly active users, according to its most recent quarterly report.

Dentons’ Wei said that because WeChat is playing a more and more important role in people’s daily lives and interpersonal contacts, business operators are also starting to use the convenient and seemingly secretive platform to engage in monopolistic behavior.

As a result, WeChat may become the new investigative focus of antitrust enforcement activities, because the app is used even more frequently than emails nowadays, he said.

Wei warned that corporate antitrust compliance efforts should also include information exchanged by employees on social networking sites, especially because some companies may participate in industrywide WeChat groups and negotiate sensitive information there with their competitors.

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