China Price Regulator Fines Chrysler, Volkswagen Over Price Monopoly

Sep 11, 2014 10:33 AM EDT | Matt Mercuro

China's anti-monopoly regulator handed out it's first-ever punishment for foreign carmakers for price-fixing on Thursday, fining Volkswagen AG and Fiat's Chrysler a total of $46 million.

The punishment raised the probability of similar fines being handed out to other companies like Daimler's Mercedes-Benz and Tata Motor Ltd's Jaguar Land Rover, which are currently being investigated for possible anti-competitive behavior.

The Shanghai branch of the National Development and Reform Commission (NDRC) said in a press statement it would fine Chrysler's China sales unit 32 million yuan ($5.22 mln) for operating a price monopoly.

The price regulator in Hubei province said it would fine FAW-Volkswagen Automobile Co Ltd, one of Volkswagen's two China car making ventures, approximately 249 million yuan for price-fixing at its Audi sales unit, according to Reuters.

Regulators said three Chrysler dealers in Shanghai and eight Audi dealers in Hubei would also be fined.

Audi and Chrysler were expected to be punished as the NDRC has previously said it had concluded the two automakers had broken the anti-monopoly law.

Audi previously admitted to "partially" breaching the rules.

China has intensified efforts to bring companies into compliance with its anti-monopoly law enacted back in 2008.

"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."

 In August, China fined 12 Japanese auto parts makers 1.235 billion yuan for manipulating prices, according to Reuters.

The auto sector in general has been under intense scrutiny, and the NDRC has been investigating the industry over accusations made by state media that global automakers are overcharging customers.

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