China fines Mercedes $56m for price-fixing

A provincial branch of China's competition regulator has fined Mercedes-Benz Rmb350m ($56m) for allegedly anti-competitive behaviour, bringing to a close one of the last major investigations into pricing practices at multinational car companies in China.

Daimler's premium car unit had been bracing for a fine from the National Development and Reform Commission ever since Mercedes' Shanghai office was raided by Chinese government investigators last year.

Foreign car companies were under scrutiny most of last year for allegedly fixing the retail prices charged by their downstream dealers and service providers.

An announcement of the decision by authorities in eastern Jiangsu province, which borders Shanghai, was posted online on Thursday morning. The regulator said Mercedes had set a floor for E- and S-Class sedans as well as for some spare parts, and reprimanded dealers who offered lower prices.

Premium sedans typically sell for higher prices in China than in Europe or the US, leading to a fast-growing trade in unauthorised "parallel imports".

"Mercedes-Benz China accepts the decision and takes its responsibilities under competition law very seriously," Daimler said. "We have taken all appropriate steps to ensure to fully comply with the law."

While the Mercedes fine pales in comparison to the $1bn penalty levied against US chipmaker Qualcomm in February, it is the highest imposed to date against an automotive company.

Audi, the premium division of Volkswagen, and Fiat unit Chrysler were fined Rmb250m and Rmb32m respectively for similar infractions in September.

Separately, 12 Japanese components makers were penalised a total of Rmb1.24bn in August after they admitted that they had colluded to fix prices, with Sumitomo Electric Industries paying the highest fine of Rmb290m.

As with Audi's penalty, imposed by the NDRC's Hubei provincial office, Mercedes' fine could have been many times higher had similar infractions been uncovered in other provinces.

Mercedes and Audi were amongst half a dozen premium carmakers who agreed to lower prices for their products and services last year during the course of the NDRC's investigation.

BMW, Jaguar Land Rover and Toyota's Lexus unit also agreed to adjust their pricing downwards, but it was never confirmed that the three companies were the subject of formal investigations.

Until Thursday's announcement, only a finding against Mercedes was pending.

Some analysts believed that the NDRC was deliberately targeting foreign companies as part of a populist campaign to force down the price of goods and services in many sectors, from autos and milk powder to semiconductor chips.

The NDRC has repeatedly denied any such bias.

The fine represents a rare setback for Mercedes, which has been gaining ground on German rivals Audi and BMW since Daimler director Hubertus Troska was sent to Beijing two years ago to turn round the operation.

Mercedes' China sales increased almost 30 per cent to 280,000 units last year.

BMW, meanwhile, agreed in January to pay dealers $820m in rebates foe 2014 to assuage complaints about what they claimed were unrealistic sales targets and tighter margins.

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