Mercedes' office in China raided by antitrust regulators

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BEIJING (Reuters) -- Daimler's Mercedes-Benz unit said it is cooperating with China's anti-monopoly authorities over an investigation into unspecified matters, after local Chinese media said the automaker's Shanghai office had been raided.

"We confirm that we are assisting the authorities in their investigation," Mercedes said in a statement.

Nine officials from the National Development and Reform Commission's anti-monopoly department visited the Shanghai offices of Mercedes on Tuesday without an appointment and questioned staff, Jiemian, a media outlet affiliated to Shanghai United Media Group, reported today. The publication said the team interviewed many senior executives and confiscated computers as part of an investigation.

Asked about the nature of the investigation, Beijing-based Mercedes spokesman Senol Bayrak said the automaker is only confirming that anti-trust officials visited the office as part of an investigation. He declined to elaborate, saying it is "an ongoing matter."

The investigation comes after Daimler announced it plans to reduce prices of spares by an average of 15 percent starting next month.

China is probing practices at Mercedes-Benz, Audi, BMW and other carmakers to see if the companies are inflating prices for spare parts, according to sources.

"The timing is a bit confusing," said Han Weiqi, a Shanghai-based analyst at CSC International Holdings. "It may be because the cut hasn't met the authorities' expectations."

Price cuts

Starting Sept. 1, Mercedes will "take the initiative" to adjust the prices of more than 10,000 products in response to the NDRC's investigation, Daimler said in a statement on Aug. 3. The move will improve the carmaker's competitiveness in after- sales services, it said.

BMW is in talks with the Chinese regulatory body about reducing prices for components, company spokesman Mathias Schmidt said this week, declining to specify what's being discussed. The automaker had already cut what it charged customers in China for spare parts in the first half of 2014, he said.

Chrysler Group cut the prices of two Jeep models from and reduced prices of 145 components by 20 percent as a response to antitrust investigations by Chinese regulators, the official Xinhua News Agency reported today, without saying where it got the information.

Audi, Chrysler

China National Radio reported that NDRC's Shanghai branch and the Hubei province price bureau found Chrysler and Audi to be engaging in monopolistic practices, without saying where it got the information. The two companies will be punished in the near future, the report said.

Chrysler said today that, in response to an antitrust probe by the NDRC and its Shanghai counterpart, it's cutting prices on 145 components by 20 percent as well as what it charges customers for two Jeep sport-utility vehicles. The "voluntary proactive price adjustments showcase the commitment" of the company "to remain highly competitive in the market," the carmaker's Chinese sales unit said in a statement.

Audi said in a statement that it attaches "great importance worldwide" to ensuring it adheres to all applicable antitrust and competition laws. Audi's Chinese joint venture said in late July that the brand would lower replacement costs of its parts by as much as 38 percent on Aug. 1.

Tata Motors Ltd.'s Jaguar Land Rover said last month it cut prices on three models by an average of 200,000 yuan ($32,400) from this month.

Some automakers have lowered prices after they were contacted by Chinese officials, China Daily reported on July 29, citing Xu Kunlin, director of the NDRC's bureau of price supervision and anti-monopoly. Xu didn't provide names of the suspected monopolies, the report said.

Automakers are the latest foreign companies to be targeted by Chinese regulators, who have ramped up anti-monopoly investigations in industries ranging from pharmaceuticals to electronics.

Regulators officially named U.S. chipmaker Qualcomm a monopoly last month and are widely expected to levy a heavy fine. Last week, agency investigators raided Microsoft's offices in four Chinese cities as part of an ongoing probe.

China is stepping up efforts to bring companies into compliance with an anti-monopoly law enacted in 2008, having in recent years targeted industries as varied as milk powder and jewellery.

Such investigations have led to substantial fines at a number multinational companies, including Mead Johnson Nutrition Co and Danone.

Bloomberg contributed to this report

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