China Caught Mercedez-Benz Guilty for Vertical Price-Fixing

The government of China has accused Mercedes-Benz of violating anti-monopoly laws and charging excessive prices for parts. Regulators found that they were engaged in “vertical price-fixing” by abusing their control over supplies of replacement parts according to reports by the Xinhua News Agency. They also said that, investigators from the eastern province of Jiangsu found that prices were so high that purchasing the parts for one Mercedes C-class car would be equal to buying 12 other vehicles. Regulators in China have investigated industries including foreign auto, technology, pharmaceutical and dairy companies since the past two years, using the 2008 anti-monopoly law to force down consumer prices.

“Mercedes-Benz is a typical case of vertical price fixing — that is, the use of its dominant position in after-market parts to maintain price controls,” said Zhou Gao, chief of the Jiangsu price agency’s anti-monopoly unit, according to Xinhua.

No indication was given as to the company’s penalty. China has used the 2008 anti-monopoly law against foreign companies more excessively. Other companies being investigated include Microsoft Corp., and Qualcomm Inc.

Mercedes did respond to the investigation earlier, by cutting the price of their replacement parts. They reduced the prices of their windshields by 38%, this was also done by Audi.The European Union Chamber of Commerce in China, in a statement last week, expressed concern foreign companies might be “disproportionately targeted” by regulators.The chamber said it had received reports of “intimidation tactics” by regulators who pressure foreign companies to accept punishments without a full hearing or involving their governments.
“Competition law should not be used as an administrative instrument to harm targeted companies or serve other aims, such as administratively forcing price reductions,” the chamber said.

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Kenneth Scott

My name is Kenneth Scott. I am a product of the 90s and die-hard fan of Michael Flatley – although I will never admit it in public. When I’m not tinkering about for my small business, I write reviews for life-saving apps and pretty much anything related to gadgets and smart-phones. I love how technology has evolved so much in the last decade, and I am always eager to review the latest apps, may they be traveling & management ones or just boredom-killers. I also secretly hope to learn step-dancing and go on a world-wide tour. Drop me a line anytime if you found some interesting new gadget or app. I would love to hear from you.