China Expands Anti-Trust Probe, Audi And Chrysler Bear The Brunt

 @avaneeshp88a.pandey@ibtimes.com on August 06 2014 2:10 AM
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People look at Audi cars during the 15th Shanghai International Automobile Industry Exhibition in Shanghai April 21, 2013. reuters/Carlos Barria

Chinese anti-trust officials confirmed that foreign automobile manufacturers Audi AG (ETR:NSU) and Chrysler were found to have violated the country’s anti-monopoly laws and could now face stringent fines, South China Morning Post, or SCMP, reported Wednesday.

“It has been found out that the two companies did have monopoly behaviour and they will be punished accordingly in the near future,” Li Pumin, spokesperson for the National Development and Reform Commission, or NDRC, which is heading the probe against the German and American car brands, told reporters in Beijing on Tuesday.

NDRC had also completed investigations into 12 Japanese auto-part makers and “would hand out punishments according to the law,” Li reportedly said, adding that authorities were also collecting evidence on possible monopoly practices by Germany's BMW (ETR:BMW).

Chinese authorities have accused foreign auto makers of earning exorbitant profits in China by dominating the market, overcharging consumers and colluding to control prices of spare parts, the Wall Street Journal reported Tuesday.

A number of foreign companies, including the German car maker Mercedes and American technology giant Microsoft have recently tangled with law-enforcement agencies in China over accusations of anti-competitive behavior.

On Monday, investigators raided Mercedes Benz’ Shanghai office, just a day after Daimler AG (OTCMKTS:DDAIF), which owns Mercedes Benz, announced that it would cut prices of spare parts for its cars in China by an average of 15 percent from September.

Volkswagen AG's (OTCMKTS:VLKAY) Audi and Tata Motors Limited's (NYSE:TTM) Jaguar Land Rover brands had also announced earlier that they would reduce prices for their vehicles in China in response to an investigation by the NDRC, the Journal reported.

"As a premium market leader Audi has made the price adjustments proactively. Audi and its joint venture FAW-Volkswagen support the efforts of the NDRC to examine the pricing in the after-sales area in China,” an unnamed Audi spokesperson told SCMP.

Yale Zhang, managing director of Shanghai-based consulting firm Automotive Foresight, told the Journal that the Chinese government was “very serious about anti-trust issues.”

"Now they (car makers) will have to get used to charging more reasonable prices," he said.

Volkswagen AG's stock fell by 3.86 percent and Daimler AG's stock fell by 3.42 percent in Tuesday trade.

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