CHINA TOPIX

11/21/2024 10:41:30 pm

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Chrysler, Audi to Be Punished By Chinese Government for Alleged Monopoly Activities

Officials May Soon Impose Fines on Automakers for Alleged Monopoly Practices

(Photo : Source: Reuters )

Automakers in China may soon face 10 percent revenue penalties by the Chinese government, in an effort to reduce and eliminate monopoly activities.

A spokesman for the National Development and Reform Commission (NDRC) insisted on Wednesday an ongoing investigation into Fiat and Volkswagen, which are owned by Chrysler and Volkswagen, respectively.

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Reuters reports that domestic media complaints regarding possible overcharging for vehicles and parts were becoming burdensome for consumers.

NDRC spokesman Li Pumin gave a briefing at a press conference on Wednesday. Li then condemned the anti-competitive behavior of Chrysler and Volkswagen.

Li also mentioned that nearly a dozen Japanese spare-part manufacturers were under investigation for similar charges. However, he did not specify the companies being investigated.

According to Li, these restrictions are in place for consumer protection.

"The purpose is to maintain a sound competitive order in the auto market and protect consumer interest," he explained.

Nearly one-third of all global sales by volume for Audi are made in China, including Hong Kong. Many experts believe that other automakers may soon be targeted for unfair practices.

In an interview with Reuters, Yale Zhang, managing director of consultancy Automotive Foresight (Shanghai) Co. LTD., mentioned the significance of the Chinese government's recent actions.

"Monopolistic practices are quite rampant in the auto industry. NDRC is first targeting imported luxury brands because the problem is most severe in this area. It's also a warning signal to the industry. If top brands like Audi gets punishment, others would know what to do," he said.

The extent the automakers will be punished remains unclear. However, the NDRC typically recommends between a one percent and ten percent total fine based on the annual profits from the year before.

There are also concerns that consumers may still face high costs, if the companies attempt to recoup their loss of revenue due to the fines imposed on them.

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