China to punish Audi, Chrysler for ‘monopoly’ acts

August 6, 2014
The Mercedes-Benz's Shanghai office is shown on August 5, 2014/AFP
The Mercedes-Benz’s Shanghai office is shown on August 5, 2014/AFP

, SHANGHAI, Aug 6  – German luxury car maker Audi and Chrysler of the United States have committed “monopoly behavior” in China and will be punished soon, the country’s regulator said on Wednesday, as a probe of foreign auto firms grows.

“It has been found out that the two companies did have monopoly behavior and they will be punished accordingly in the near future,” Li Pumin, spokesman for the National Development and Reform Commission (NDRC), told a news conference.

The investigations are taking place as regulators show concern over what they view as unfairly high prices for both parts and vehicles in China, the world’s largest car market.

Beijing imposes heavy duties on imported cars and parts, which manufacturers say ramp up costs for Chinese consumers.

Li did not clarify what was meant by “monopoly behavior”, but China considers using a dominant market position to set prices as a form of monopoly.

Audi is the luxury car unit of Volkswagen, Europe’s biggest auto group, while Chrysler has merged with Italy’s Fiat.

A spokesman for Fiat-Chrysler in China declined to comment on the announcement, while Audi could not be reached.

Li also confirmed an investigation into Mercedes-Benz, a unit of Germany’s Daimler, according to a transcript of a Beijing press conference posted online, following a raid at a Mercedes office in Shanghai on Monday.

Daimler said on Tuesday that it was “assisting” the inquiry.

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 a pricing and “anti-monopoly” investigation of the entire auto industry in China.

– Sweeping probes –

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

The Shanghai branch of the NDRC is investigating Chrysler, while the central province of Hubei is inspecting Audi, and both probes were almost complete, Li said.

The eastern province of Jiangsu, which neighbors Shanghai, is also investigating Mercedes-Benz in five cities, he said.

The NDRC is one of several Chinese government bodies that investigates violations of the country’s “anti-monopoly” law. It is responsible for doing so from a pricing perspective.

Since last year, China has launched sweeping probes into alleged wrongdoings by foreign companies in several sectors.

Last week, a Chinese government agency said it was investigating US software giant Microsoft for allegedly operating a monopoly in its market after raiding four of its offices around the country.

The State Administration for Industry and Commerce (SAIC), which also enforces the anti-monopoly law, said that inquiry centers on Microsoft’s Windows operating system — which is used on the vast majority of computers in China — and the Office suite of programs.

In another chill for US tech firms, state media have said China is planning to announce US chip maker Qualcomm has monopoly status in the mobile phone chip market.

Chinese authorities investigated British drug maker GlaxoSmithKline following allegations it systematically offered bribes to doctors and hospitals and passed the cost on to consumers through high prices.

Following a 10-month probe, police said in May that GSK’s former head of China operations and two other executives authorized the bribery.

Last year, China fined six baby formula producers — all but one of them foreign — a total of $108 million for price-fixing.

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