China's National Development and Reform Commission (NDRC) announced Wednesday that their initial probe discovered monopolistic practices made by Audi and Chrysler. Both companies will be fined up to 10 percent of their annual sales revenue, once proven guilty.
Fiat Spa owns Chrysler and Audi is Volkswagen's property. Both of these became premium car brands in China. As soon as the probe is completed, these brands will be fined as much as 10 percent of their domestic revenues from China. NDRC's ongoing investigation stated that they discovered that both Audi and Chrysler had "conducted anti-competitive behaviors," Reuters reported.
Aside from Audi and Chrysler, NDRC will also start investigating Mercedes-Benz, owned by Daimler AG. This week, Daimler announced a price cut in the spare parts sold in China by an average of 15 percent starting September 1, 2014, in height of the investigation.
"The purpose is to maintain a sound competitive order in the auto market and protect consumer interest," NDRC spokesman Li told Reuters. The commission did not provide further details on the planned penalty for Chrysler and Audi. But, based on the country's current anti-monopoly regulations, the NDRC can command up to 10 percent of the manufacturer's domestic income for the previous year as a fine.
According to some experts, automakers and dealers have too much power when it comes to car deals and the supply of spare parts. This allows them to control prices easily, which is a main violation of anti-trust laws enacted in China.
Chrysler could not be reached for comments, but Audi confirmed the report in an emailed statement to BBC: "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."
