China targets foreign auto sector with Mercedes probe

China targets foreign auto sector with Mercedes probe
A man walks past a Mercedes-Benz logo outside its Shanghai office, August 5, 2014.

SHANGHAI - China's probes into foreign firms spread to the auto sector Tuesday as German car giant Daimler said it was assisting authorities after reports anti-monopoly investigators raided an office of its Mercedes-Benz unit.

"We confirm that we are assisting the authorities in their investigation," Daimler Greater China said in an email to AFP.

Analysts said the move marked an escalation of previous scrutiny of foreign automakers in China, the world's largest car market, following investigations of overseas firms in several other sectors over the past year.

A team of nine anti-monopoly investigators from China's National Development and Reform Commission (NDRC) paid a surprise visit to a Mercedes-Benz premises in Shanghai on Monday, grilled employees and "forcibly" checked computers, reported Jiemian, a new media platform of state-run Shanghai United Media Group.

Daimler, maker of Mercedes-Benz and Smart cars, did not directly refer to the incident in its statement but said the matter was ongoing.

The report quoted an unnamed source saying that the investigation focused on "Benz's prices of finished automobiles and its policy of maintaining minimum prices with distributors".

"It is an escalation from what they (authorities) were doing," said Namrita Chow, principal analyst for IHS Automotive in London. "The NDRC has had probes into different pricing strategies... however, nothing was done about it." She added the latest investigation did not appear to be into an organised pricing cartel, but rather what China considered to be unfairly high prices for spare parts and automobiles compared with other markets.

Beijing imposes heavy duties on imported cars and parts, which manufacturers say ramp up prices for Chinese consumers.

The NDRC is one of several Chinese government bodies that investigates violations of the country's "anti-monopoly" law. It is responsible for doing so from a pricing perspective.

On Sunday, Daimler announced it would slash prices of more than 10,000 spare parts for its Mercedes-Benz cars in China from September 1, according to a separate statement that linked the move to a pricing and "anti-monopoly" investigation of the entire Chinese auto industry.

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