Microsoft, partner rapped over breach of rules in console venture

The Ministry of Commerce on Tuesday pulled up global tech giant Microsoft Corp and its Chinese partner in an Xbox game console venture for breaching antitrust rules, but did not impose any serious punishment after it was found that the companies did not hinder free market competition.

Microsoft and Shanghai Oriental Pearl Media Co, known as BesTV, were fined 200,000 yuan ($31,430) each for failing to report to antitrust regulators that their joint venture exceeded a market share threshold that usually triggers a disclosure requirement.

Microsoft and BesTV formed a venture in 2013 to bring the Xbox, a video game product, to China after the government lifted a 14-year ban on consoles.

The Xbox investigation, which did not find Xbox in serious violation of any antitrust rules, was unrelated to an ongoing probe by the National Development and Reform Commission into Microsoft's Windows operating system and Office software sales practices.

He Jingtong, a professor of international trade at the Tianjin-based Nankai University, said with China shifting to a slower economic growth, the move is an indicator that the government is keen on promoting a fair market environment to attract more global investment.

Meanwhile, Canada-based Bombardier Inc and a unit of local train manufacturer China Railway Rolling Stock Corp were also fined 150,000 yuan because they set up a joint venture before obtaining prior government approval.

Bombardier and the Nanjing-based CRRC subsidiary agreed to invest 125 million yuan each in November 2014 to set up the joint venture but only notified regulators in December, violating the antitrust law, the ministry's anti-monopoly bureau said in a statement on Tuesday.

Zhao Ying, a researcher at the Institute of Industrial Economics at the Chinese Academy of Social Sciences in Beijing, said: "Over the past three decades, China has established an effective framework of commercial laws in most key business areas and the critical issue is their implementation and enforcement.

"With the country having a complex industry system and a diversified market, China also wants to further tighten its regulatory control on both giant and foreign businesses in the country through administrative actions."

The ministry also fined a unit of Shanghai Fosun Pharmaceutical Group 200,000 yuan for acquiring a stake in a Suzhou-based firm without government approval.

The ministry said that the fine was due to a deal Fosun Pharma Industrial Development Co Ltd made in 2014 to acquire a 65 percent stake in Suzhou Erye Pharma Co.

The Fosun Pharma unit had already transferred a 35 percent stake in the firm to itself before it obtained government approval for the transaction, violating anti-monopoly laws, the ministry said.