China 'to punish' Audi and Chrysler

Audi hybrid China's crackdown on foreign firms is stretching into the car industry

China's regulator has said it will "punish" carmakers Audi and Chrysler for "pursuing monopoly practices" following competition investigations.

A spokesman from China's regulatory body said: "It has been found that the two companies did have monopoly behaviour and they will be punished accordingly in the near future."

The regulator did not clarify what it meant by "monopoly behaviour".

The ruling follows increased scrutiny on foreign firms in China.

Audi is a unit of German carmaker Volkswagen, while Chrysler of the US has recently merged with Italy's Fiat.


The investigations are being led by China's National Development and Reform Commission (NDRC).


Analysis: By John Sudworth, BBC News, Shanghai

There is a feeling of vulnerability among foreign companies in China nowadays.

"Is no foreign brand safe in China?" Time magazine asked last week.

Multinational corporations, some observers suggest, make convenient political scapegoats for a government keen to show it is fighting for the consumer and tackling abuses of corporate power.

But China can claim, to some extent at least, that it is tackling a genuine problem: the perceived gap in pricing between goods sold in China and foreign markets, a gap not lost on the increasing numbers of affluent Chinese travellers now shopping overseas.

Some sectors, particularly the luxury car makers, claim that China's own heavy import duties account for much of the increase in their prices. Chinese state media, on the other hand, has accused them of using their monopoly power to their own advantage.

Whatever the truth, there is one political dimension to all this that is certain.

Unlike in other markets, there is little chance of challenging state-led investigations in the Chinese courts.

Once the Communist Party has decided you're fleecing consumers, you have one choice.

Fall in line, pay the fines and reduce your prices, and some foreign corporations have been doing exactly that.


In a statement emailed to the BBC, Audi's office in China said: "We can confirm that the Hubei Price Bureau is investigating the dealership network of the FAW-Volkswagen Audi Sales Division Audi in Hubei province.

"Audi and its Joint-Venture FAW-Volkswagen support the government investigation and co-operate with the NDRC."

The company also said it had no further comment before the investigation was finally concluded.

The Chrysler office in China could not be reached for comment.

NDRC spokesman Li Pumin also confirmed an investigation into Mercedes-Benz, which is a unit of Germany's Daimler.

Earlier this week, NDRC officers raided a Mercedes office in Shanghai.

According to state news agency Xinhua, "inspectors are still collecting evidence and investigating whether Mercedes-Benz has used monopolistic tactics".

China has been conducting frequent probes into the practices of foreign companies, including those in the pharmaceuticals industry, as well as technology.


Last month, China's State Administration for Industry and Commerce - the body responsible for enforcing business laws - said it was looking into "alleged monopoly actions" by US tech firm Microsoft.

The announcement came after officials from the regulator visited some of Microsoft's local offices.

Chrylser Jeep in showroom China overtook US as the world's largest car market by sales in 2009

The NDRC - one of three government anti-trust agencies in China - is in charge of the examination and regulation of price-related monopolistic practices.

Mr Li says the agency started launching anti-monopoly probes into China's car industry at the end of 2011, with the aim of safeguarding competition in the market and protecting customers' legitimate rights.

He added that the NDRC had also recently finished investigations into 12 Japanese companies and discovered monopolistic behaviours in prices of car parts and bearings. The Japanese companies will also be punished in accordance with Chinese law.

More on This Story

Global Car Industry

The BBC is not responsible for the content of external Internet sites

More Business stories


BBC Business Live

    06:13: INTERN PAY Radio 5 live

    Christian May from the Institute of Directors is on 5 live talking about employment reform, including reforms to how interns are paid, or otherwise. "It's worth considering it's unlikely to be a silver bullet," he says. There's a chance restrictions could be gamed to allow employers not to pay interns. While 25% of businesses have interns they don't pay, "in this day and age its getting difficult to justify having someone work for them and not paying them."

    06:03: ETHICAL INVESTMENTS Radio 5 live

    Justin Urquhart Stewart of 7 Investment Management is on 5 live talking about ethical investment. "It's very badly marketed so people don't understand it ," He says. But because such investments strip out companies such as tobacco, alcohol, arms and oil, returns can also be slim.

    06:01: Howard Mustoe Business reporter

    Good morning. Get in touch via email and twitter @BBCBusiness.

    06:00: Matthew West Business reporter

    Morning folks. It's a gloomy start to the day with the EY Item Club downgrading its 2015 UK economic growth forecast quite sharply this morning as a result of the global slowdown and uncertainty over interest rates. There's more housing market data out later and the Prime Minister is going to be pushing for more apprenticeships today too. We'll bring you more as it happens.



From BBC Capital


  • FishThe Travel Show Watch

    Meet the Helsinki market trader who sells fish to the President of Finland

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.