Mercedes, BMW face China price-fixing probe as automaker investigation spreads

Audi and Chrysler guilty of monopoly practices, mainland authorities confirm, as investigation spreads to Mercedes and BMW

PUBLISHED : Tuesday, 05 August, 2014, 11:34pm
UPDATED : Wednesday, 06 August, 2014, 12:03pm

Mainland authorities could slap fines on carmakers Audi and Chrysler as the latest anti-monopoly crackdown widens to Mercedes-Benz and forces foreign manufacturers to cut prices.

Nine antitrust officers from the National Development and Reform Commission (NDRC) raided the Shanghai office of German premium carmaker Mercedes-Benz on Monday morning, according to the English-language Twitter account of Communist Party mouthpiece the People's Daily. The officers met Mercedes-Benz executives and checked staff computers, the People's Daily said.

"We confirm that we are assisting the authorities in their investigation," Senol Bayrak, China spokesman for Daimler, which owns Mercedes-Benz, told the South China Morning Post. "We are unable to comment further on what is an ongoing matter."

The NDRC confirmed that German luxury brand Audi and American carmaker Chrysler had indulged in monopoly practices by together setting vehicle maintenance and spare parts prices, the official China News Service said yesterday.

The two manufacturers could face fines and the authorities were also collecting evidence on possible monopoly practices by German carmaker BMW, the report said.

Meanwhile, the NDRC said on Wednesday that the government had completed investigations into 12 Japanese car-parts makers and would hand out punishments according to the law, Reuters reported.

Only a day before the raid, Daimler said it would cut prices of spare parts for Mercedes-Benz models on the mainland by an average 15 per cent from next month.

Audi last week also slashed prices for its spare parts, after its British rival Jaguar Land Rover reduced prices for three popular models in response to the NDRC investigation.

Responding to the Post, Audi reiterated an earlier statement saying: "As a premium market leader Audi has made the price adjustments proactively. Audi and its joint venture FAW-Volkswagen support the efforts of the NDRC to examine the pricing in the after-sales area in China."

Chrysler did not reply to inquiries by the Post.

Yale Zhang, managing director of Shanghai-based consulting firm Automotive Foresight, said the NDRC probe would pressure foreign carmakers, which have been selling luxury cars for at least three times the price of other markets such as the US.

"Foreign carmakers are expected to slash prices of car models as well as spare parts and after sales services. This is good for Chinese customers," he said.

Enforcement of the anti-monopoly law, which was enacted in 2008, has become more frequent in recent months.

Last week, the State Administration for Industry and Commerce said it was investigating whether US technology giant Microsoft had violated anti-monopoly laws.

Deng Zhisong, a partner at Beijing's Dacheng Law Office, said the latest crackdown on foreign carmakers showed that the authorities were paying increasing attention to the higher prices that mainland companies and consumers were charged.

"With more experience accumulated over the past six years and the anti-monopoly law having become more mature, the mainland authorities are expected to expand the scope of anti-monopoly investigations to more areas," he said.