China's antitrust regulator said this week that it will punish Audi and Chrysler for monopoly practices, possibly paving the way for the companies to be fined 10 percent of their domestic annual sales revenue in the biggest auto market in the world.
Chrysler is owned by Fiat SpA, meanwhile Volkswagen owns Audi, both premium brands in China.
The National Development and Reform Commission (NDRC) said today (Aug. 6) that an ongoing investigation into the two companies showed they had "conducted anti-competitive behaviors," according to Reuters.
"They will be punished accordingly in the near future," said NDRC spokesman Li Pumin during a press conference in Beijing.
Audi and other car companies have rushed to change their pricing strategies in China as a result of the government investigation into the auto industry, and amid domestic media criticisms that foreign automakers were overcharging Chinese car buyers on vehicles and spare parts, according to Reuters.
The NDRC added that it was launching a probe into Mercedes-Benz, which is owned by Daimler AG, and that it had completed investigating at least a dozen Japanese spare-part manufacturers on similar anti-trust charges.
The companies have not been named yet by the regulator.
"The purpose is to maintain a sound competitive order in the auto market and protect consumer interest," said NDRC spokesman Li, according to Reuters.
The punishment for Audi and Chrysler has not been specified by the NDRC yet. The NDRC can impose fines of between 1 and 10 percent of company's revenues for the previous year under a six-year-old anti-monopoly law.
"NDRC would normally set a percentage of annual sales in relevant markets as fines based on how cooperative the companies are," said Colin Liu, a lawyer in the automotive industry, according to Reuters.
Automakers have too much leverage over part suppliers and car dealers, according to industry experts. This allows them to control prices, which is considered a violation of China's anti-trust laws.
"Monopolistic practices are quite rampant in the auto industry. NDRC is first targeting imported luxury brands because the problem is most severe in this area," said Yale Zhang, managing director of consultancy Automotive Foresight (Shanghai) Co. Ltd, according to Reuters. "It's also a warning signal to the industry. If top brands like Audi gets punishment, others would know what to do."
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