Mercedes-Benz Fined $56 Million For Allegedly Price-Fixing In China

Reports indicate a pricing regulator in China has fined Daimler AG’s Mercedes-Benz $56.49 million over allegations of price-fixing. The National Development and Reform Commission claims the German automaker pressured dealerships to set minimum sales prices on some of its cars and spare parts and warned dealers that they would face the risk of “reduced policy support” from the company if they failed to comply.

“The investigation found Mercedes-Benz and its dealers in Jiangsu came to and carried out monopoly agreements to cap the lowest sales prices of E-Class, S-Class models and certain spare parts,” said the Jiangsu pricing regulator in a statement.

A representative for Daimler confirmed that the regulator investigated and penalized Mercedes-Benz. “Mercedes-Benz China accepts the decision and takes its responsibilities under competition law very seriously,” the representative told Reuters. “We have taken all appropriate steps to ensure to fully comply with the law.”

The fines against Mercedes-Benz are the latest in a series of actions in China against automakers and parts suppliers, the majority of which have been focused on the practice of resale price maintenance, where manufacturers issue minimum pricing guidelines to resellers of their products to avoid competitive cost reductions. This is considered by China’s enforcers to be a violation of its antimonopoly laws, thereby damaging fair market competition and interfering with consumer rights. China is the largest car market in the world, and foreign automakers have been under increased scrutiny for allegedly reaping high profits by overcharging customers in the country.

Last September, Chinese regulators fined Chrysler and the Audi unit of Volkswagen a combined $46 million for antitrust violations. Last August, regulators issued price-fixing fines of approximately $200 million in total against 12 Japanese auto parts and components suppliers, including Sumitomo Electric and Mitsubishi Electric.

Chinese authorities have also been conducting investigations into foreign business practices in other sectors, including the pharmaceutical, technology and food industries. For example, last August, six foreign infant formula companies were fined a record $109 million for price-fixing in the country. Concerns have been raised by the foreign business community that they are being targeted disproportionately, but China’s leaders insist that they do not discriminate between domestic and foreign companies.

“The Chinese government conducts antimonopoly in accordance with the law and in a transparent and consistent way,” said Premier Li Keqiang last September. “China will continue to open its gate and continue to expand it. We will continue to improve and perfect the business environment.”