Reuters Insider - Mercedes-Benz - China’s latest price fixing target

GIB Capital

18/08/2014 22:41

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 Source:             Thomson Reuters                                   
                                                                       
 Description:        German luxury carmaker Mercedes-Benz has been     
                     found guilty of manipulating prices for after     
                     -sales services in China, according to the        
                     official Xinhua news agency.                      
 
 
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Transcript (May be auto-generated)

 The Mercedes-Benz dealership in Shanghai was operating as normal despite the 
latest price fixing scandal involving a European firm. According to China's 
official news agency, the luxury German automaker - owned by Daimler - has been 
found guilty of manipulating prices of after-sales services. It says replacing 
all the spare parts for a C-Class Merc in China can cost 12 times more than 
buying a new vehicle. The firm's offices in Shanghai and another dealership were
raided earlier this month. Bill Russo is Managing Director of the advisory firm 
Gao Feng. He says it's all part of a drive to help the Chinese consumer. What we
are seeing is, first of all, a communication to the market that, over the years,
foreign-branded products have been priced very high and informing the Chinese 
consumer that perhaps they should take another look at the prices and look for a
more competitive price and demand a more competitive price from the 
manufacturers. Daimler says it's assisting the authorities and there was no 
mention of any penalties. But anti-trust regulators can impose fines of up to 
10% of the previous year's China revenues. The investigation is one of several 
involving the auto industry. Daimler, Volkswagen's Audi and BMW have all slashed
the price of spare parts in recent weeks. And earlier this month authorities 
said they would punish Audi and Fiat's Chrysler for monopoly practices. Audi - 
China's best-selling premium car brand - will reportedly be fined more than $40 
million. By enforcing these laws, they are actually making the foreign branded 
products more affordable to the market, which in the end is going to make it 
harder for Chinese-branded car makers to compete against them. So the unintended
consequence is you're giving the consumers a better price but you are also 
forcing the local car makers to compete with foreign branded products that are 
more affordable. The auto industry isn't the only one falling foul of China's 
2008 anti-competition law. Milk powder makers and electronics firms are among an
array of companies which have been in the spotlight