Two days ago, we reported that Mercedes-Benz China is going to be under government’s antitrust investigation.
In fact, the Chinese government act so quickly that yesterday (Aug. 04, China time), the China National Development and Reform Commission (NDRC), who is the regulation authority, searched Mercedes-Benz China’s Shanghai office without any prior notice.
The sudden search lasted for one full day. During the search, some Mercedes-Benz China management employee were interviewed by the regulator; at the same time, computers in the office were examined by the regulator and some files stored in the harddisk were collected, which may be used as evidence against Mercedes-Benz.
According to one of our sources who is familiar with this issue, the major reason why Mercedes-Benz China triggered this investigation, is that Chinese authority got report that Mercedes-Benz set minimum pricing floor for vehicles sold in China market, internally within its dealership network.
Section 14 of the Chinese Antitrust Law forbids a company and its dealership set a minium price floor for a merchandize, which will be sold to third-party customer.
The Chinese government’s antitrust investigatioin not only focus on Mercedes. In fact as of today, both Chrysler and Audi have also been found to violated the antitrust regulation in China, by the NDRC, and they will both receive fines and other related penalties.
There are other opinions about the Chinese governemnt’s antitrust probe. For example, Prof. Ferdinand Dudenhöffer from University of Duisburg-Essen, points out that the root cause of this government action, lies on Chinese government is not satisfy by the fact that foreign luxury auto makers earn a higher profit margin in China market. Dudenhöffer said, we should view this to be a signal from the Chinese government, that it is going to put more pressure on foreign automotive companies, and their operation strategies should follow government regulation and laws.
We all know, the profits of major German auto makers (VW, Daimler, BMW), heavily rely on the Chinese market. The antitrust action will obviously affect the German Big-three significantly.
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