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China probing over 1,000 domestic, foreign auto companies for anti-trust violations

BMW, Volkswagen’s Audi, Daimler’s Mercedes-Benz, Tata Motors’ Jaguar Land Rover, Fiat’s Chrysler, Toyota and Honda have all announced price cuts for vehicles or spare parts in July and early August

 

Over 1,000 domestic and foreign auto companies are facing anti-monopoly probes as the Chinese government has launched a crackdown on top overseas car makers like Mercedes and Audi for alleged violations of rules.

 

Anti-trust investigations already underway in the auto and telecommunications sectors have spread to other industries also, including a number of cement and medical companies, state-run China Daily reported.

 

Besides the recent high-profile cases, the probe into domestic companies are also being done and a monopoly case involving a state-owned company will be disclosed soon, an official at the National Development and Reform Commission was quoted as saying by the Daily.

 

The latest auto company involved in the probe is US manufacturer General Motors, which Tuesday said its passenger vehicle joint venture in China was contacted by the commission after at least seven foreign car makers cut prices amid the antitrust investigations.

 

BMW, Volkswagen’s Audi, Daimler’s Mercedes-Benz, Tata Motors’ Jaguar Land Rover, Fiat’s Chrysler, Toyota and Honda have all announced price cuts for vehicles or spare parts in July and early August.

 

Besides the auto companies, Chinese officials have placed companies like Microsoft under anti-trust violation probe.

 

FAW-Volkswagen’s Audi division may face a fine of 1.8 billion yuan ($292 million) for operating a monopoly, The Economic Observer reported.

 

The report said the punishment is equivalent to 1% of the company’s sales in 2013, which is the minimum level as the Anti-Monopoly Law states that violators can be fined between 1% and 10% of their sales revenue for the previous year.

 

Recent high-profile anti-trust cases have sparked concerns over China’s monopoly efforts, with some foreign businesses complaining that they are being targeted unfairly.

 

The NDRC official, however, said that the investigations, some of which began in 2011, are not aimed at any specific type of industry or a specific country.

 

“Investigations in many industries started with domestic companies and then spread to foreign companies,” he said.

 

He said investigations into state-owned or Chinese private enterprises are also underway and a monopoly case involving a state-run company will be disclosed soon.

 

He did not disclose the sector in which the state-owned company is and only disclose that it is not in the auto industry.

 

The official said many domestic automakers are under scrutiny, but the problem here is not as obvious as that involving their international peers, partly due to their small market share.

 

Domestic-brand automakers accounted for less than 20% of China’s auto sales in the first half of this year, the China Association of Automobile Manufacturers says.

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Security Committee to clear Railway FDI proposals in sensitive area

To deal with all the security related issues in sensitive areas like border and tribal areas, FDI proposals beyond 49% in railways will be cleared by the Cabinet Committee on Security

 

The Indian government has imposed certain restrictions on foreign direct investment (FDI) in railways for projects in sensitive areas by stipulating that proposals seeking overseas investments beyond 49% will be cleared by the Cabinet Committee on Security (CCS).

 

Earlier this month, the Union Cabinet had cleared the long-delayed proposal for relaxing FDI policy in the cash-starved Indian Railways.

 

According to sources the Home Ministry had raised concerns with regard to rail infrastructure in border areas.

 

To deal with all the security related issues in "sensitive areas" such as border and tribal areas, FDI proposals beyond 49% will be cleared by the Cabinet Committee on Security (CCS), they said.

 

In all other areas such as high-speed train systems, suburban corridors and dedicated freight line projects, 100% FDI is permitted through automatic route.

 

The foreign investment liberalisation in the sector is aimed at helping in modernisation and expansion of the rail projects.

 

However, FDI will not be allowed in train operations and safety.

 

According to estimates, the sector is facing a cash crunch of around Rs29,000 crore and allowing of FDI will help mop up resources.

 

With the FDI nod, the proposed Mumbai-Ahmedabad high speed rail corridor is expected to get a push. The construction of exclusive rail corridor for freight movement is also likely to get a boost.

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New formula for natural gas pricing by 30th September

The Modi government decided to review the pricing formula keeping in mind public interest and recommendations of the Parliamentary Standing Committee, oil minister Pradhan said

 

The Indian government on Wednesday said it will come out with a new natural gas pricing formula by 30th September keeping in mind the interest of investors and public.

 

Replying to questions in Rajya Sabha, Oil Minister Dharmendra Pradhan said the National Democratic Alliance (NDA) government decided to review the pricing formula keeping in mind public interest and recommendations of the Parliamentary Standing Committee.

 

The Minister did not share details, but said the decision will be taken keeping in mind interest of investors and public and the formula will be announced by 30th September.

 

The previous United Progressive Alliance (UPA) government had in December last year decided to price all domestic gas from 1 April 2014 according to a formula suggested by the Rangarajan Committee.

 

The formula was notified on 10th January but before a new rate could be announced, general elections were declared and the issue was left for the new government to decide.

 

The new government on 25th June decided to defer the implementation till September-end to hold wider consultations.

 

The existing gas pricing under new exploration licensing policy (NELP) was approved in 2007 and was to remain valid up to March 2014.

 

For reviewing the formula, the government constituted a committee under C Rangarajan in May 2012 and based on the panel's recommendation, Domestic Natural Gas Pricing Guidelines, 2014 was notified in January this year.

 

The Rangarajan formula would lead to doubling of natural gas prices to $8.4 per million British thermal unit, an increase that would jack up urea production cost, electricity tariff and CNG rates.

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