Following raids on its dealerships in Shanghai and the eastern province of Jiangsu, the National Development and Reform Commission declared that the car maker had “controlled prices of spare parts and repair and maintenance in downstream markets”. Mercedes-Benz owner Daimler said it was co-operating with the authorities, but would not comment on pending proceedings. It follows similar accusations of “monopolistic behaviour” against Audi and Chrysler. Penalties are steep – China’s Anti-Monopoly Law allows for fines of up to 10 per cent of annual revenue for pricing violations.  Other industries which are being scrutinised for monopoly practices include alcohol and pharmaceuticals. 

Grabbing share

The authority’s review of the car market comes in the face of a market picture which shows foreign brands grabbing increasing share from domestic ones. Overseas marques have grown 8.5 per cent year-on-year, easily overtaking a 5.4 per cent uplift in Chinese models.  In the luxury sector, BMW, Mercedes and Audi account for around 80 per cent of sales.The European Chamber of Commerce in China has questioned whether foreign companies 'are being disproportionately targeted' by the measures. It claims to have heard numerous alarming anecdotes that 'administrative intimidation tactics are being used to impel companies to accept punishments and remedies without full hearings'.  

Healthy market economy

The European Chamber states that effective implementation of China’s Anti-Monopoly Law would be beneficial for developing a healthy market economy in China.  But in a strongly worded statement which hints at the way some foreign companies have been treated it says: 'Practices such as informing companies not to challenge the investigations, bring lawyers to hearings, or involve their respective governments or chambers of commerce are contrary to best practices.' Both Mercedes and BMW announced price reductions in spare parts late this summer.