Volkswagen, Fiat Chrysler handed first ever anti-trust fines in China

China's anti-monopoly regulator on Thursday announced its first-ever punishment of foreign carmakers for price-fixing, fining a Chinese venture of Volkswagen AG and the China sales unit of Fiat's Chrysler a combined US$46 million. -- PHOTO: REUTERS
China's anti-monopoly regulator on Thursday announced its first-ever punishment of foreign carmakers for price-fixing, fining a Chinese venture of Volkswagen AG and the China sales unit of Fiat's Chrysler a combined US$46 million. -- PHOTO: REUTERS

SHANGHAI, (Reuters) - China's anti-monopoly regulator on Thursday announced its first-ever punishment of foreign carmakers for price-fixing, fining a Chinese venture of Volkswagen AG and the China sales unit of Fiat's Chrysler a combined US$46 million.

The penalties raised the possibility of similar fines being levied against other global players such as Daimler's Mercedes-Benz and Tata Motor Ltd's Jaguar Land Rover, which are being probed for possible anti-competitive behaviour.

The price regulator in Hubei province said it would fine the sales unit of Volkswagen's joint venture FAW-Volkswagen Automobile 249 million yuan (US$40.6 mln) for fixing Audi prices.

Chrysler's China sales unit will be fined 32 million yuan for operating a price monopoly, anti-trust regulator the National Development and Reform Commission (NDRC) NDRC Shanghai branch said.

Separately, three Chrysler dealers in Shanghai and eight Audi dealers in Hubei would also be fined.

While many industries in China have come under the spotlight as the authorities intensify efforts to bring companies into compliance with an anti-monopoly law enacted in 2008, the auto sector has been under particular scrutiny amid accusations by state media that global car makers are overcharging consumers.

The penalty is severe, and companies can be fined up to 10 per cent of their annual China revenues for breaking the anti-monopoly law. But the FAW-Volkswagen penalty represents just 6 per cent of Audi's turnover in Hubei, according to a person with knowledge of matter.

Last month, China, the world's largest car market, fined 12 Japanese auto parts makers a record 1.235 billion yuan for manipulating prices.

The anti-trust investigations are causing concern and in August the European Union Chamber of Commerce in China said Beijing was using strong-arm tactics and appeared to be unfairly targeting foreign firms.

Foreign automakers are obliged to form joint ventures in China.

Volkswagen has a 30 per cent stake in FAW-Volkswagen, Volkswagen's premium auto brand Audi has 10 per cent and Chinese state-owned group FAW owns the rest.

Punishment for Chrysler and Audi has been widely expected as the NDRC previously said it had concluded the two carmakers had broken the anti-monopoly law.

Audi had already said its sales arm had violated "part" of the country's anti-monopoly laws.

"We have been optimising the management processes in the sales and dealership structure," Audi China said in a statement on Thursday.

"Audi and FAW-Volkswagen attach great importance that all applicable antitrust and competition laws are adhered to."

Officials at Chrysler in China could not be reached for comment.