EU plans no retaliation over mainland car probes

European Commission says it is keeping close watch on 'anti-monopoly' campaign that has led to fines and price cuts at top European brands

PUBLISHED : Friday, 22 August, 2014, 1:21am
UPDATED : Friday, 22 August, 2014, 1:21am

The European Commission plans no retaliation over China's probe of carmakers that has slapped Europe's biggest marques with fines and demands for price cuts that industry watchers say smack more of protectionism than promoting competition.

In its first official word on what Beijing terms "anti-monopoly" investigations, the European Commission told the South China Morning Post it would follow developments closely and take up issues with Beijing if needed.

German car giants Audi, Mercedes-Benz and BMW were among the first companies named in a series of investigations launched earlier this month into foreign carmakers that have since snagged Chrysler from the United States and Japanese luxury marques Lexus and Infiniti.

"We remain in close contact with EU industry and will not hesitate to take issues up with our Chinese counterparts through the relevant channels wherever warranted," the commission said in response to questions from the Post.

But it stopped short of criticising the probe and said it did not believe that China's anti-monopoly powers were being misused.

"The EU does not believe that the Chinese authorities will use the anti-monopoly law improperly," it said.

The commission's position is in stark contrast to the European Union Chamber of Commerce, which slammed the crackdown in a strongly worded statement issued in Beijing last week.

"The European chamber has received numerous alarming anecdotal accounts from a number of sectors that administrative intimidation tactics are being used to impel companies to accept punishments and remedies without full hearings," the statement said, adding that some investigated firms said they had been advised by the authorities not to challenge probe findings.

"Competition law should not be used as an administrative instrument to harm targeted companies or serve other aims, such as administratively forcing price reductions," said the chamber, which represents 1,800 member companies in China.

Audi, BMW and Mercedes-Benz have announced price cuts in the wake of the announcement of investigations. Toyota Motor Corp has followed suit, announcing price cuts on spare parts for its Lexus brand in China.

The move came a day after Beijing fined 12 Japanese car parts makers a record 1.2 billion yuan (HK$1.5 billion) for price-fixing.

Chinese media reports last week said Audi could face a fine of 250 million yuan. Audi said it would accept a penalty, making the announcement before the investigation had officially ended.

Xinhua reported this week Mercedes-Benz had been found guilty of price-fixing. Daimler, which owns Mercedes-Benz, declined to comment, saying the investigation was still continuing.

The issue is unlikely to be taken to the World Trade Organisation, which has oversight of global trade disputes. It has no specific role in dealing with international competition issues.

Competition rules were part of the original Doha development agenda that was subsequently dropped by WTO members.

The Chinese authorities say they are not unfairly targeting foreign companies in a bid to protect domestic producers.

The National Development and Reform Commission says it is investigating possible antitrust violations across the entire car industry. The China Daily newspaper has put the number of companies under investigation at more than 1,000, including domestic producers.