In the news: Mercedes-Benz gets fined US$56 million and the NPC issues revised Advertising Law and Food Safety Law

Mercedes-Benz fined US$56 million for price-fixing

The National Development and Reform Commission has fined Daimler's Mercedes-Benz Rmb350 million (US$56 million) in Jiangsu Province for “excluding and limiting market competition and hurting consumer interests.” Regulators said they found the carmaker had colluded with its dealers on prices of E- and S-class cars as well as that of some spare parts. Some dealers in the province were fined a combined Rmb7.9 million. Mercedes-Benz's fine was equivalent to 7% of its revenue in the province last year. The fine is the highest imposed to date against a single auto company. Audi and Chrysler were fined Rmb250 million and Rmb32 million, respectively, last year for similar reasons. When these investigations began last fall, we wrote that authorities would not loosen their grip anytime soon. This year, we're seeing the results.

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NPC issues revised PRC Advertising Law

The Standing Committee of the National People's Congress (NPC) has approved an amendment to the 1994 PRC Advertising Law, effective September 1, that is largely aimed at restricting tobacco advertising, especially to minors. It prohibits tobacco ads on mass media, in public places, public vehicles and outdoors, and bans ads for other products or services including tobacco products, packaging or trademarks. The law imposes strict measures for drugs, medical and healthcare products, as well as dairy products, drinks and foods. It also includes increased penalties for false advertising – P&G's toothpaste brand Crest was fined almost US$1 million in March for altering images to make teeth look whiter. The new rules call for businesses to rethink their marketing strategies. This revision is the latest in a string of steps taken to further protect consumer rights, a goal China is taking very seriously.

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China's toughest Food Safety Law in history released

The NPC has amended the PRC Food Safety Law, which hands out the heaviest penalties yet to offenders. The revised law has 154 articles, compared with the previous 104, provides harsher punishments for food safety-related violations and tightens regulations on baby formula and online shopping. It will go into effect on October 1 this year. The amendment provides for jail time for adding inedible substances to food and enhances consumer protection by allowing buyers to demand reparation of three times any loss suffered from substandard food. Landlords who turn a blind eye to illegal activities on their premises and suppliers who knowingly sell unlawful substances to producers can have their revenues seized and be fined up to Rmb200,000. Officials who abuse their power are also subject to administrative and criminal penalties. Producers must test every product batch, conduct regular inspections and submit reports to regulators. This move won't come as a surprise. It is about time food safety is properly enforced. Consumers will welcome the harsher measures, which could restore confidence in the public – maybe F&B businesses will have the law to thank after all.

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