HONG KONG -- Government investigators in China have found the Mercedes-Benz unit of Daimler, the German automaker, culpable of antitrust price violations, the Chinese state news media reported Monday.
The announcement was the latest in a spate of inquiries over pricing and sales policies that have raised pressure on foreign corporations across China.
The price bureau of Jiangsu province, adjacent to Shanghai, concluded that prices for parts and maintenance for Mercedes vehicles had been set at exorbitant levels that violated China's anti-monopoly law, reported the China News Service, a state-run agency, citing an official from the bureau.
The Jiangsu officials did not announce a fine against Mercedes or the distributors, and the decision does not apply nationwide. But the announcement added to a recent pattern in which carmakers come under antitrust investigation by local regulators, who publicize price-fixing accusations, followed in some cases by the companies cutting prices nationwide.
Last week, investigators in Hubei province in central China announced fines against BMW dealers for illegal pricing, and Daimler's officers in Shanghai were searched by officials this month.
Daimler said two weeks ago that it would cut the price of Mercedes repair parts in China by an average of 15 percent "in response to anti-monopoly investigations into the automobile industry" by the National Development and Reform Commission, the central government agency backing many of the local inquiries.
Unlike other recent official inquiries, this one in Jiangsu gave some details of the accusations against Mercedes distributors and sales management.
"The Mercedes-Benz case is a classic case of a vertical price monopoly, exploiting its dominant position to impose controls on the price for parts and maintenance in the downstream post-sale market," Zhou Gao, the official from the price bureau, said Sunday, according to the China News Service. Many imported cars and parts are sold in China at prices many times their prices in other markets, he said.
"This is an utterly abnormal phenomenon," the report quoted Zhou as saying.
In response to the announcement, Senol Bayrak, a company spokesman in Beijing, issued a brief email saying, "As stated earlier, we are assisting the authorities in their investigation."
But the Jiangsu price agency said its case remained firm. It said the individual parts for a C-Class Mercedes sedan were sold at prices 12 times higher than for a new sedan bought whole, a claim also made by the Insurance Association of China and the China Auto Maintenance and Repair Trade Association. But that comparison did not take into account the high taxes China places on cars, especially imports. Two Mercedes dealers contacted in Jiangsu said they sold Mercedes C-Class sedans after paying a tax of about $57,000 to $88,000, depending on the model and extras.
If any fines or other penalties are lodged in the Mercedes case, Daimler could appeal through administrative review procedures. But such an appeal would be highly unusual among foreign multinationals, which were wary of goading Chinese regulators.
Daimler is not alone in being investigated. Last week, General Motors said Chinese officials had approached it about an antitrust inquiry, and Audi, a subsidiary of Volkswagen, said investigators in Hubei province had concluded that its dealers there violated pricing rules. Microsoft, Qualcomm, Accenture and six makers of infant formula have also come under investigation in the past year.
Some groups and experts have criticized the antitrust investigations. Last week, the European Union Chamber of Commerce in China said it had "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."
"Practices such as informing companies not to challenge the investigations, bring lawyers to hearings or involve their respective governments or chambers of commerce are contrary to best practices," the chamber said.
Business on 08/19/2014