GM’s China unit fined $29 million for price-fixing

The Chinese unit of General Motors has been fined 201 million yuan ($28.9 million) for infringing on the rights of consumers and its competitors through price-fixing since 2014, the National Development and Reform Commission, China’s top economic regulator, said on Friday.

The amount was about 4 percent of SAIC GM’s sales in China last year. It was also the second time a US company was fined this month as the nation strengthens anti-monopoly regulation.

Earlier this month, the commission imposed a fine of 119 million yuan on the China unit of US company Medtronic, a leading supplier of highend medical devices, for price-fixing.

Zhang Handong, director of the NDRC’s Price Supervision Bureau, said last week that no one should read too much into the timing of the penalty decisions or the businesses that were targeted, referring to the General Motors case.

The penalty came after US president-elect Donald Trump pledged to impose higher tariffs on Chinese exports and after a phone call between him and Taiwan leader Tsai Ingwen on Dec 2 strained Sino-US relations.

Xu Xinyu, a commission official who was in charge of the GM case, said the investigation was launched in 2014, after the commission got clues from its price report platform about the company’s monopoly practices.

“The fine is fair,” said Xu. “We just aim to improve market order.”

As of Friday, the commission had issued fines on automakers totaling 2.25 billion yuan since 2014.

John Zeng, managing director of LMC Automotive Consulting (Shanghai), said the fine itself will not hurt the joint venture’s profit too much, but will force SAIC GM and the industry to reconsider how to handle relations with dealers.

GM’s behavior is a common practice for automakers setting minimum prices for their cars, according to Zeng.

The company will provide full support to its joint venture in China to ensure that all appropriate actions and responses are taken with respect to the matter, GM China said after it was fined.

A sales manager at an auto dealership in Shanghai who requested anonymity said the company had asked dealers to set a limit on the maximum discount, either through emails or oral instructions.

The company also tracked prices by making unannounced visits to stores, he said.