friday, 12 september of 2014

China fines Audi and Chrysler for price-fixing

China’s anti-monopoly regulator has fined Volkswagen’s Audi and Fiat’s Chrysler for fixing the price of cars and replacement auto parts, as part of a probe into foreign carmakers that has international investors crying foul.

Luxury carmakers have already announced a change in the way they sell replacement parts in China, as the National Development and Reform Commission targets foreign companies for pricing violations in industries including pharmaceuticals, baby formula and software development.

The NDRC’s local bureau in Hubei province on Thursday fined FAW-Volkswagen Sales, which markets Audis in the country, Rmb249m ($40.6m). It also fined eight Audi dealerships a total of Rmb29m.

Chrysler’s China unit was hit with a Rmb32m fine, and three of its dealerships were levied a combined Rmb2m, the NDRC said.

“We accept the penalty and we have been optimising the management processes and sales and dealership structure,” said Audi in China. Fiat Chrysler could not immediately be reached for comment.

The fines came the day after Chinese Premier Li Keqiang reassured foreign investors that their money was still welcome in the country, and that they would be treated equally to their local counterparts.

In recent weeks, foreign chambers of commerce have hit back at the Chinese investigations, suggesting they have unfairly targeted foreign companies – an accusation that Mr Li has denied.

Xu Kunlin, a senior official at regulator NDRC, on Thursday said: “If people say we are selective [towards foreign companies], the truth is that we do not have the time and energy to select.

“We do not select which companies to look into – the consumers do the selecting. We investigate the companies where we receive well-grounded complaints.”

He added that the complaint against Audi arose in February following a discrepancy in repair appraisals following an accident between an Audi and a taxi.

In a rare rift between foreign companies, European auto parts suppliers this week accused the carmakers of forcing them to sign exclusivity deals that artificially inflate prices – in effect supporting the NDRC’s accusations.

Since the beginning of the year, foreign car companies including Mercedes, BMW, Chrysler and Audi have been under scrutiny for possible infractions of China’s 2008 Anti-Monopoly Law by allegedly fixing the retail prices charged by their downstream dealers and service providers.

Foreign auto brands have been gaining market share in China – the world’s largest market by sales – at the expense of wholly Chinese-owned marques.

Annual growth in car sales slowed to 8.5 per cent in August, down from 9.7 per cent in July, according to data released on Thursday by the China Association of Automobile Manufacturers.

Foreign brands enjoyed double-digit sales growth, while Chinese brand sales grew less than 6 per cent.

(Published by Financial Times - September 11, 2014)

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