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Mercedes-Benz Fined by China for Price Fixing

In the latest pushback against foreign automakers, Chinese authorities from Shanghai fined the worldwide renowned automobile manufacturer, Mercedes-Benz, 350 million Yuan ($57 million) for breaking anti-monopoly laws allegedly reaping high profits by overcharging customers for some of the most famous car models namely E and S-Class cars and replacements parts as well.

 

When compared to Daimler’s overall business in China, the fine imposed is still rather small. This is because last year Mercedes-Benz generated more revenue on an average in a single day, as compared to those cars manufactured from the broader Asian region. Regardless, the fine stands as a strong example of the increasing scrutiny global companies and foreign car makers are facing in China.

 

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In fact, last summer the country took serious action against foreign companies that disobeyed and violated the anti-monopoly laws. This included a record $975 million fine against the famous American chip manufacturer, Qualcomm. Not to mention, in September last year, Chinese regulators also fined the Audi unit of Volkswagen and Chrysler a combined fine of $46 million for violating anti-trust laws.

 

The previous month, China also issued fines totaling $200 million against more than 10 Japanese auto parts manufacturers and suppliers in the country. According to recent reports from BBC, it was revealed that some local regulators of Mercedes-Benz were also fined a total of 7.7 million RMB. This leaves us asking one question: what did Mercedes-Benz say about the fine and charges placed?

 

Well, a spokesman for Daimler said that the China division of Mercedes-Benz accepts full responsibility of its actions and doesn’t go against the charges and fines. He further stated that the company will take all appropriate steps that need to be taken in order to ensure every dealer and division of Mercedes-Bens in China complies with the anti-trust and anti-monopoly laws of the country.

 

So, how were the fines calculated? Well, authorities in China reported that the fine against Mercedes-Benz was equivalent to approximately 7% of its overall revenue in the country last year. However, in another report the company also stated that they may place a 10% fine on the company’s sale for the preceding year. Regardless, all fines must be paid by German car giant.

 

The company has agreed to do so too, as Daimler reaped a €13.29 billion ($14.38 billion) profit last year, a noticeable 24% increase in yearly revenue from 2013. However, this is just Daimler’s profits; Mercedes-Benz generated more than €22.39 billion in revenue last year (in Asia). Therefore, this proves the fact that China is the largest single market for Mercedes-Benz in the region.

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