Mercedes 'cooperating' with anti-monopoly body

Daimler AG's luxury brand Mercedes-Benz said yesterday that it is cooperating with China's anti-monopoly authorities on an investigation, as local media reported that its Shanghai office had been raided and that authorities have already found evidence of monopolistic practices by Audi and Chrysler.

"We confirm that we are assisting the authorities in their investigation," the German carmaker said in a statement, in response to media reports that its Shanghai office had been visited by officials from the National Development and Reform Commission.

Beijing-based spokesman Senol Bayrak said the company was confirming only that NDRC officials had visited Mercedes-Benz's office on Monday as part of an investigation.

He declined to elaborate, saying it was "an ongoing matter."

Jie Mian, a Shanghai-based publication, reported yesterday that nine officials from the NDRC's anti-trust investigation team sprung a surprise visit at Mercedes-Benz's Shanghai office on Monday morning. The publication said the team interviewed many senior executives and confiscated computers.

Meanwhile, China National Radio said yesterday that the regulator has found evidence of Audi and Chrysler being involved in monopolistic practices and is set to issue them with penalties.

Monday's visit to the Mercedes-Benz Shanghai office followed an announcement by the company over the weekend that it will lower prices on more than 10,000 spare parts by an average of 15 percent from September 1.

Foreign carmakers are queuing up to bring down the prices of vehicles imported to China amid the ongoing probe into their alleged monopolies.

Chrysler yesterday became the fourth overseas automaker — after Jaguar Land Rover, Audi and Mercedes-Benz — to announce price cuts, as a "proactive response" to the anti-trust investigation by the NDRC's Bureau of Price Supervision and Anti-Monopoly.

The latest wave of price cuts, which was started by Jaguar Land Rover at the end of last month, came almost a year after state media reported on the huge discrepancy between the prices of foreign cars and related spare parts in China and abroad.

Carmakers suspected of manipulating prices by using their dominant positions in the retail market could face charges of monopoly and fines of between 1 and 10 percent of their previous year's sales.

The China Automobile Dealers Association said that according to its own research, there is evidence of anti-competitive practices within the industry.

Market analysts have said that while the auto industry might be embroiled in the anti-trust sweep for some time, the recent round of price cuts is unlikely to have much impact on the market.

Though the current discount offered on a top specification Range Rover is about 300,000 yuan (US$48,614), that represents only about 10 percent of the ticket price, while the biggest discount available on a Jeep is just 5 percent.

It is widely acknowledged that the carmakers' monopoly was born out of a regulation introduced in 2005, which dictates that all imported cars and their spare parts must be channeled through a general distributor in China, giving carmakers a big say on pricing.

This, however, is likely to be revised in the wake of the anti-trust investigation, said Chen Jinjun, secretary-general of the dealers association.

There has also been talk recently of the creation of a car importing channel in the Shanghai free trade zone, parallel to those controlled by carmakers, but no details have been disclosed.