China to Punish Audi Chrysler for Monopoly Acts

Copyright Bill Pugliano

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China to Punish Chrysler, Audi for 'Monopoly' Acts

Regulators believe prices for both parts and vehicles are unfairly high in the country, but manufacturers say authorities impose heavy duties on imported cars and parts, which ramp up costs for domestic consumers.

SHANGHAI -- China stepped up pressure on foreign carmakers in the world's biggest auto market Wednesday, pledging to punish German luxury brand Audi and Chrysler for "monopoly behavior."

The National Development and Reform Commission (NDRC), which polices violations of China's "anti-monopoly" law, has been investigating the sector -- dominated by foreign companies and their joint ventures -- for more than two years but had not mentioned any particular firms.

Audi's German headquarters said the company was co-operating with the NDRC inquiry but would not comment further. A spokesman for Fiat-Chrysler in China declined to comment.

It is the latest sweeping probe China has launched into alleged wrongdoings by foreign firms in multiple different sectors, among them pharmaceuticals, technology and baby milk.

The NDRC announcement came two days after anti-monopoly investigators from the agency raided a Shanghai office of Mercedes-Benz, a luxury unit of Germany's Daimler, by grilling employees and inspecting computers. Li confirmed the investigation into Mercedes-Benz, according to a transcript of the news conference posted online. Daimler said on Tuesday that it was "assisting" the inquiry.

China is critically important for foreign auto makers, especially as the European market has faltered, with total sales of 21.98 million vehicles last year.

Regulators believe prices for both parts and vehicles are unfairly high in the country, but manufacturers say authorities impose heavy duties on imported cars and parts, which ramp up costs for domestic consumers.

Moves to lower prices can garner public support, while Beijing has also shown a tendency to favor building up national champions, especially in industries dominated by foreign companies.

China considers using a dominant market position to set prices as a form of monopoly. Violators' "illegal gains" can be confiscated, and they can be fined up to 10% of their sales revenue in the previous year.

Price Cuts

Another 12 Japanese companies were under investigation for monopoly pricing of auto components and bearings, Li said, but declined to name them, adding details would be released later.

Car companies have rushed to cut prices in recent weeks in an apparent bid to appease Chinese officials.

On Sunday, Daimler announced it would slash prices of more than 10,000 spare parts for its Mercedes-Benz cars in China from September 1, according to a statement that linked the move to investigations of the entire auto industry in China.

Audi lowered its spare part prices last week, according to a statement, while Chrysler said Tuesday it would slash prices for both parts and some of its Jeep models, Dow Jones Newswires reported.

The NDRC spokesman said the anti-monopoly investigations started at the end of 2011, but analysts say China has recently escalated the issue.

"Dealers and consumers have already complained for years," said Yale Zhang, managing director of research firm Automotive Foresight, adding that auto firms' "strong actions, which have existed for years, actually are a monopoly".

He said authorities were examining industry-wide practices such as setting minimum retail prices for dealers and limiting who can sell spare parts, which keeps prices higher.

- Bill Savadove, AFP

Copyright Agence France-Presse, 2014

TAGS: The Economy
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