China Imposes $56 Mil Price-Fixing Fine On Mercedes-Benz

A Chinese pricing regulator fined Daimler’s Mercedes-Benz about 350 million renminbi ($56 million) for violating anti-monopoly laws by setting minimum prices dealers were required to charge.

The fine is the highest handed out so far to automakers probed by the government last year for antitrust violations.

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Mercedes-Benz had been bracing for a fine

As reported by ValueWalk, last August, the office of Mercedes-Benz in Shanghai was raided by Chinese regulators as part of the government’s anti-monopoly investigation.

China’s official news agency Xinhua said Mercedes-Benz, a division of Germany’s Daimler, had “controlled prices of spare parts and repair and maintenance on downstream markets”. Besides Mercedes-Benz, China’s National Development and Reform Commission was also investigating other German automakers, including Audi AG and Bayerische Motoren Werke AG, as well as Japanese car makers, to find out if these companies were inflating the prices of spare parts.

Posting their decision online on Thursday morning, the authorities in eastern Jiangsu province said Mercedes had set a floor for E-Class and S-Class sedan prices as well as for some spare parts, and reprimanded dealers who offered lower prices.

Typically, premium sedans sell for higher prices in China than in Europe or the US, leading to a fast-growing trade in unauthorized “parallel imports”.

Accepting the decision, Mercedes-Benz China indicated it takes its responsibilities under competition law very seriously and it has taken all appropriate steps to ensure full compliance with the law.

Mercedes-Benz fine pales in comparison to Qualcomm

As detailed by ValueWalk, last September, Chinese business regulators imposed fines on automakers Audi and Chrysler of $40.5 million and $5.2 million, respectively, in a large-scale anti-monopoly campaign against the auto industry.

Mercedes and Audi were among half a dozen premium carmakers who agreed to lower prices for their products and services last year during the course of the NDRC’s investigation. Jaguar Land Rover, BMW and Toyota’s Lexus unit also agreed to adjust their pricing downwards, but it was never confirmed that the three companies were the subject of formal investigations.

Earlier, U.S. chipmaker Qualcomm was hit with a fine of $1 billion for anti-trust violations. Thus, the Mercedes fine pales in comparison to the penalty levied against Qualcomm, although it is the highest imposed to date against an automotive company.

Besides global car manufacturers, others, including food companies and technology firms such as Microsoft Corp. faced antitrust probes in China last year. China found a dozen Japanese auto-parts makers guilty of price fixing in 2014, and levied a total of 1.24 billion yuan in fines, the biggest antitrust penalties in the country since the rules came into effect seven years ago.