Mercedes-Benz fined $56.5m for price fixing

Mercedes-Benz, a division of the German automobile manufacturer Daimler AG has been fined 350 million yuan ($56.5 million) for price fixing, the Jiangsu Provincial Price Bureau announced on Wednesday.

Several Mercedes-Benz dealerships were fined 7.87 million yuan.

After ongoing investigations since August, the bureau said that from January 2013 to July 2014, the auto giant forced the floor prices of its E-Class and S-Class cars on dealers, in violation of China's Anti-Monopoly Law.

The local government fined Mercedes-Benz and several dealerships in Nanjing, Suzhou and Wuxi for monopolistic practices involving vehicle and auto parts sales.

The penalty on Mercedes-Benz is 7 percent of the company's sales revenue last year from the two models in the region. The dealers were fined 1 percent of sales. The price bureau mitigated or waived fines against some suspected dealers for their cooperation during the investigations.

Beijing Mercedes-Benz Sales Service Co said in a statement it "fully respects and accepts the findings and punishment decision, and will comply immediately".

"Having drawn important lessons from this, we will ensure strict compliance with relevant laws, strengthening the legal and regulatory controls within our company, dealer network, and various business divisions to resolutely ensure that these issues do not arise again," it said in a statement.

A report jointly released by the China Automotive Maintenance and Repair Trade Association and Insurance Association of China in April 2014 found replacement parts for Mercedes-Benz C-Class vehicles had cost 3.72 million yuan, 12 times that of the car's starting price of about 310,000 yuan.

Jia Xinguang, a senior analyst with the China Automobile Dealers Association, said it would have been easy for several dealerships from one region to manipulate market prices, as long as they acted together.

"Price fixing has existed widely, but was rarely looked into in the past.

"The priority is to supervise on a day-to-day basis, rather than launch investigation campaigns and hand out fines," he said.

A long list of carmakers, suppliers and dealerships were investigated for price fixing last year by the National Development and Reform Commission, including Germany's Audi and BMW, the United States car brand Chrysler, and 12 Japanese auto parts companies.

Chrysler was fined 31.6 million yuan, and 10 of the 12 Japanese suppliers were fined a total of 1.24 billion yuan.

Shanghai General Motors, a joint venture between General Motors Co and SAIC Motor Group that manufactures and sells Chevrolet, Buick and Cadillac brand automobiles in the Chinese mainland, was also contacted by the commission during the anti-monopoly storm.

Last year, BMW, Audi, Chrysler, Toyota Motor Corp and Honda Motor Co all announced price cuts for cars or spare parts in response to the anti-monopoly investigations.

Jaguar Land Rover reportedly followed suit for fears of being investigated.

According to the Chinese Anti-Monopoly Law, which took effect in 2008, companies and their dealers are forbidden to restrict or fix the minimum prices of goods.

China is beefing up its anti-monopoly campaign to create a fairer business environment.

The largest anti-monopoly case so far has involved US chipmaker Qualcomm Inc, which was fined 6.08 billion yuan in February for abusing its dominance in wireless technology to charge "unfairly high" licensing fees.

Mercedes-Benz's latest E-Class was launched in April last year, and the latest S-Class variant was launched in August 2013. Mercedes-Benz sold 281,588 cars in China in 2014, 29.1 percent more than the 218,045 units sold in 2013. The volume in China contributed 17.1 percent to the brand's 1.65 million units global deliveries.

Mercedes-Benz has set a sales target of more than 300,000 cars for this year in China. It opened 106 new dealerships last year, marked the brand's largest ever global network expansion, bringing its total to 447 sites in 214 cities.

haoyan@chinadaily.com.cn