China to fine Audi $40 million for breaking monopoly law, paper says

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SHANGHAI -- China will fine Audi about 250 million yuan ($40 million) for violating anti-monopoly laws, the 21st Century Business Herald, an influential business daily, reported on Thursday.

Citing an unidentified source that the paper described as authoritative, the fine to be imposed on the Volkswagen Group subsidiary is calculated based on a percentage of its 2013 car sales in the central province of Hubei.

Under the 6-year-old anti-monopoly law, the National Development and Reform Commission (NDRC), China's anti-trust regulator, can impose fines of between 1 percent and 10 percent of a company's revenues for the previous year.

Audi could not immediately be reached for comment.

The NDRC has been investigating the business practices of Audi's sales arm with dealers in Hubei.

Audi had already said its sales arm -- a joint venture of parent VW Group and state-owned FAW Group -- had violated "part" of the country's anti-monopoly laws, and that it would accept the penalty.

Growing tensions

Tensions in China’s foreign business community escalated to new highs this week after European companies protested that local authorities involved in the antitrust crackdown are abusing their power through intimidation tactics.

Chinese investigators are picking on foreign companies, pressuring them into accepting punishments and depriving them of full hearings, the European Union Chamber of Commerce said Wednesday in a statement, without naming anyone.

Representatives at the chamber, which has about 1,800 members in the country, declined to elaborate on any specifics beyond the statement.

Business sentiment is deteriorating in China as dozens of foreign companies, including Germany’s three biggest luxury carmakers, are being targeted in the country’s broadest antitrust investigation since the nation’s anti-monopoly law went into effect six years ago.

The probes, focusing on the car industry, have also involved Japanese automakers and General Motors Co.

“Foreign companies in China used to enjoy a lot of incentives but there’s a sense that this era is gone,” said Kelly Liu, a consultant at the law firm of Carroll, Burdick & McDonough LLP in Beijing. “China is still a good investment in the mid-to-long term, versus mature markets, but the rules of the games have changed, and the environment is no longer as loose and incentives-driven as before.”

Reuters and Bloomberg contributed to this report.

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