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 The report made no mention of possible penalties, but China's 2008
anti-monopoly law allows the National Development and Reform
Commission (NDRC), the country's anti-trust regulator, to impose
fines of up to 10 percent of a company's China revenues for the
previous year.
An array of industries, from milk powder makers to electronics
firms, have been coming under the spotlight in recent years as China
intensifies its efforts to bring companies into compliance with the
2008 legislation.
The auto industry has been under particular scrutiny, with a wave of
investigations prompting carmakers such as Mercedes-Benz, owned by
Daimler AG <DAIGn.DE>, Volkswagen AG's <VOWG_p.DE> Audi and BMW
<BMWG.DE> to slash prices on spare parts in recent weeks.
The Jiangsu Province Price Bureau, which launched an investigation
last month, found evidence of anti-competitive practices after
raiding Mercedes-Benz dealerships in the eastern coastal province
and an office in neighboring Shanghai, Xinhua said in its report on
Sunday.
A Daimler spokesman repeated a statement, first made by
Mercedes-Benz on Aug. 5, that it was assisting the authorities with
their investigation, adding that it was unable to comment further as
it was still an on-going matter.
"It is a typical case of a vertical monopoly in which the carmaker
uses its leading position to control the prices of its spare parts,
repair and maintenance services in downstream markets," Zhou Gao,
chief of the anti-trust investigation at the Jiangsu bureau, told
Xinhua.
Industry experts say automakers have too much leverage over car
dealers and auto part suppliers in China, enabling them to control
prices, considered as a violation of the country's anti-trust laws.
The Xinhua report said the cost of replacing all the spare parts in
a Mercedes-Benz C-Class could be 12 times more than buying a new
vehicle, citing a report from the China Automotive Maintenance and
Repair Trade Association.
WORLD'S BIGGEST CAR MARKET
Early this month the NDRC said it would punish Audi and Fiat SpA's
<FIA.MI> Chrysler for monopoly practices. Chinese media reported
last week that Audi, the best selling foreign premium car brand in
China, would be fined around 250 million yuan ($40.7 million).
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Foreign car brands, all of whom operate in China through joint
ventures with a local partner, have been fiercely competing to up
their share in the world's largest car market.
Daimler has said that it wants to boost China sales of Mercedes-Benz
cars to more than 300,000 cars a year by 2015, while Audi expects
China to make up 40 percent of its sales by 2020.
Citi analysts said in an Aug. 11 note that, should a manufacturer be
hit with a penalty of even 1 percent of annual revenue, that could
erode 10 percent of its joint venture's net profit.
China's government has in the past few years stepped up its
enforcement of its anti-monopoly law, slapping several multinational
companies, including Mead Johnson Nutrition Co. <MJN.N> and Danone
SA <DANO.PA>, with fines.
The government is conducting an anti-monopoly probe into U.S. tech
giant Microsoft Corp <MSFT.O>, and regulators also recently said
U.S. chipmaker Qualcomm Inc. <QCOM.O> had a monopoly.
(The story was refiled to fix a typo in the first paragraph)
(1 US dollar = 6.1457 Chinese yuan)
(Editing by Edwina Gibbs and Alex Richardson)
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