China car probes mark anti-monopoly war

China on Wednesday announced that it will punish two auto giants for monopolistic practices, indicating a step up in enforcement of the country's six-year-old Anti-Monopoly Law.

Separate anti-trust probes into Chrysler and Audi, conducted since late 2011 alongside similar investigations into other players in the auto sector, are drawing to an end, said Li Pumin, spokesman for the National Development and Reform Commission (NDRC).

He did not specify punishments.

Chrysler was investigated by the Shanghai Municipal Development and Reform Commission and Audi by the Hubei Province Price Bureau.

Probes into 12 Japanese companies have also been completed, finding monopolistic behavior on prices of auto parts, and they will be punished in accordance with the law, Li said.

He confirmed reports that the Jiangsu Province Price Bureau separately launched an anti-trust investigation last week into Mercedes-Benz dealers in five Jiangsu cities. On Monday, inspectors from the bureau and the Shanghai Municipal Development and Reform Commission visited Mercedes-Benz's Shanghai premises.

Inspectors are still collecting evidence and investigating whether the German car giant has used monopolistic tactics, the spokesman said.

The NDRC launched anti-monopoly probes into the auto sector at the end of 2011 to safeguard competition in the market and protect customer rights.

If a firm manipulates prices by controlling production, distribution and sales of a product, it violates the Anti-Monopoly Law, which came into force in 2008.

According to the Anti-Monopoly Law of China, enterprises which have been involved in a monopoly may be fined between 1 and 10 percent of their total sales of the previous year.

Many auto makers, especially luxury brands, have announced price cuts in the past two weeks.

The latest such move was made by Chrysler's China unit, which on Tuesday announced a 20 percent-price cut for 145 spare parts, a 650,000-yuan (106,557 U.S. dollars) reduction for its Jeep Grand Cherokee SRT8 model and a 450,000-yuan cut for its 5.7L Grand Cherokee.

The company claimed the price cuts were made to reward Chinese consumers for their loyalty and to respond "positively" to the NDRC's anti-monopoly probes.

On Sunday, Mercedes-Benz announced that it will slash prices for some spare parts by up to 29 percent from Sept. 1. The reductions will involve over 10,000 parts, with a 15-percent price cut on average.

At the end of July, Jaguar Land Rover and Audi also reduced prices for cars or parts. They both said that the price cuts were made in response to the the NDRC's anti-monopoly probes.

Analysts believe that anti-monopoly probes will become regular practices.

Anti-monopoly lawyer Hao Junbo said the Anti-Monopoly Law has been "dormant" since it came into force, but it will be better practiced in the future.

Liu Chunyan, an associate professor of law with Tongji University, believes this is just a beginning and the probes may extend to other sectors as it has taken some time for supervisors to get up to speed with how to enforce the anti-monopoly laws.

Besides the car sector, anti-monopoly investigations have extended to the IT and telecom sectors, with U.S. software giant Microsoft and U.S. chip maker Qualcomm implicated last week.

Wei Shilin, a lawyer with Dacheng Law Offices, said that it is a good result for the involved enterprises to cut prices, but the ultimate goal is to streamline market management and build a fair market environment.

China's anti-monopoly legal system contains an Anti-Monopoly Law, Regulations on Anti-Price Monopoly and Procedural Regulations on Administrative Enforcement of Anti-Price Monopoly.