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Old 23rd April 2015, 21:56   #1
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Default Mercedes fined $56 Million by China for price fixing!

Authorities in China's eastern Jiangsu province fined Daimler's Mercedes-Benz 350 million yuan ($56 million) for a pricing monopoly there.

It is said that Merc pressured dealers to set minimum sales prices on some of its cars and spare parts, and given warnings to dealers who did not comply.

The investigation found Mercedes-Benz and its dealers in Jiangsu carried out monopoly agreements to cap the lowest sales prices of E-class, S-class models and certain spare parts," says a statement from the Jiangsu pricing regulator.

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"Mercedes-Benz China accepts the decision and takes its responsibilities under the competition law very seriously," Daimler said in an e-mailed statement. "We have taken all appropriate steps to ensure to fully comply with the law."
China has been punishing foreign automakers for price fixing as this is not the first time. Last year when it fined the Chinese venture of Volkswagen and a sales unit of Fiat Chrysler Automobiles' Chrysler division a combined $46 million.

If this is whats happening in China, what about India ?

Is our government serious to take such actions against the foreign auto companies & is there a similar law in India or a regulatory body to take such steps ? What do you think ?

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Last edited by karan561 : 23rd April 2015 at 22:10.
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Old 24th April 2015, 12:15   #2
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Default re: Mercedes fined $56 Million by China for price fixing!

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Originally Posted by karan561 View Post
Authorities in China's eastern Jiangsu province fined Daimler's Mercedes-Benz 350 million yuan ($56 million) for a pricing monopoly there.

It is said that Merc pressured dealers to set minimum sales prices on some of its cars and spare parts, and given warnings to dealers who did not comply.

The investigation found Mercedes-Benz and its dealers in Jiangsu carried out monopoly agreements to cap the lowest sales prices of E-class, S-class models and certain spare parts," says a statement from the Jiangsu pricing regulator.


China has been punishing foreign automakers for price fixing as this is not the first time. Last year when it fined the Chinese venture of Volkswagen and a sales unit of Fiat Chrysler Automobiles' Chrysler division a combined $46 million.

If this is whats happening in China, what about India ?

Is our government serious to take such actions against the foreign auto companies & is there a similar law in India or a regulatory body to take such steps ? What do you think ?

Source
I don't understand one aspect.

Since Mercedes Benz doesn't have a monopoly in the cars of its segment.
And dealer has a certain minimum selling price based on instructions from upstairs.
Won't he keep losing the sales?

And lets say he keeps losing sale because of higher price than competition like Audi, BMW etc - it is ultimately Mercedes loss.
How does customer suffer in all this?
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Old 24th April 2015, 14:06   #3
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Default Re: Mercedes fined $56 Million by China for price fixing!

Not just 'foreign' companies, even Maruti does that. My Alto was invoiced at 5000 Rs more than the paid amount, because as per the executive "Maruti will take action against my dealer if the bill amount is less than a particular amount."
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Old 24th April 2015, 20:56   #4
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Default Re: Mercedes fined $56 Million by China for price fixing!

Even some Indian companies follow the same policy. At the time of negotiating the final price for a Hyundai Grandi10, the dealer rejected any option of discounts stating that the car was new launch, and to maintain fairplay amongst dealers, they could only charge the ex-showroom price, with no room for discounts at all. They said the company had a minimum selling price policy which dealers must adhere to.
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Old 25th April 2015, 10:53   #5
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Default Re: Mercedes fined $56 Million by China for price fixing!

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Originally Posted by alpha1 View Post
I don't understand one aspect.

Since Mercedes Benz doesn't have a monopoly in the cars of its segment.
And dealer has a certain minimum selling price based on instructions from upstairs.
Won't he keep losing the sales?

And lets say he keeps losing sale because of higher price than competition like Audi, BMW etc - it is ultimately Mercedes loss.
How does customer suffer in all this?
The intent of Price fixing is may be to set the price of a product as high as possible to generate more profits.

In our case here, Mercedes forced the dealers to increase the already agreed price.

Probably the increase delta was reserved only for Mercedes and not the dealers.

Government doesn't allow that & price fixing is not allowed in many countries and China is one of them.

You can read more about Price Fixing & the countries where its illegal & where its not (India seems to be allowing such a practice) HERE

Last edited by karan561 : 25th April 2015 at 10:55.
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Old 25th April 2015, 15:39   #6
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Default Re: Mercedes fined $56 Million by China for price fixing!

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Originally Posted by karan561 View Post
The intent of Price fixing is may be to set the price of a product as high as possible to generate more profits.

In our case here, Mercedes forced the dealers to increase the already agreed price.

Probably the increase delta was reserved only for Mercedes and not the dealers.

Government doesn't allow that & price fixing is not allowed in many countries and China is one of them.

You can read more about Price Fixing & the countries where its illegal & where its not (India seems to be allowing such a practice) HERE
I don't think car spare parts are free float anywhere in the world. They are always fixed! Ever recall negotiating the price of spares?

And regarding the point about fixing the price of a new car, let me repeat again: if Audi is selling it's car with higher discounts leading to a lower price than Merc, no one will buy Merc. Except for a fanboi.
So price fixing by Merc executives will always hurt Merc sales (by driving away the customers).

I still haven't got answer to my question: does Merc hold a monopoly in China?
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Old 25th April 2015, 22:51   #7
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Default Re: Mercedes fined $56 Million by China for price fixing!

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Originally Posted by alpha1 View Post

I still haven't got answer to my question: does Merc hold a monopoly in China?
Nope, China is an Audi nation, since the early '90s when the govt. as part of some austerity hogwash banned officials from travelling in Merc sedans.
Couple that, with VW being the Maruti of China, naturally means Audi is the top selling luxury car brand in China.
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