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Ford hit with huge fine for fixing prices

By Li Fusheng | China Daily | Updated: 2019-06-10 13:06
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Changan Ford displays a Focus sedan at an auto show in Hainan province in January 2019. [Photo provided to China Daily]

American automaker's joint venture had set resale value on its model range in Chongqing

China's top market regulator has fined Ford's major Chinese joint venture because of antitrust violations, adding to the woes of the United States' second-largest carmaker in the world's largest car market.

Changan Ford Automobile was fined 162.8 million yuan ($23.6 million) for restricting retailers' sale prices of its models in Chongqing, where the joint venture is headquartered, said the State Administration for Market Regulation on its website last week.

The joint venture, which produces Ford's passenger vehicles in China, "set a minimum resale price" since 2013 for vehicles sold in the city that "deprived dealers of pricing autonomy ... and damaged fair competition and legitimate interests of consumers," said the statement.

The administration imposed the fine that equaled 4 percent of the company's 2018 sales in the city of Chongqing, in accordance with China's anti-monopoly law.

The authority will continue to strengthen anti-monopoly law enforcement to safeguard fair market competition, build a sound business environment, promote high-quality development and protect consumer interests, according to the statement.

"Changan Ford respects the decision made by the State Administration for Market Regulation," said a Ford representative. She added it has taken "corrective action in its regional sales management together with its dealers".

The anti-monopoly fine adds to Ford's mounting problems in China. It has been afflicted by deteriorating sales in the country for at least two years, because of its slow introduction of models.

Statistics show that Ford's sales slumped almost by half in 2018, when China's overall vehicle market saw its first ever decline since 1990.

The downturn did not turn for the better this year. The carmaker's sales in the first quarter of 2019 stood at 136,279 vehicles, down 35.8 percent from the same period last year.

Ford has been planning a turnaround. Earlier this year, it announced a plan to launch more than 30 new models in China over three years as part of its efforts to accelerate its product development and market distribution in the country.

The new models will be under the Ford and Lincoln brands and 10 of them will be new energy vehicles, said Anning Chen, president and chief executive of Ford China.

Ford is not the first international carmaker that has been punished because of antitrust violations in China.

In 2016, GM's joint venture with China's SAIC Motor Corp was fined $29 million for enforcing minimum prices on dealers to charge for Cadillac, Chevrolet and Buick models.

In 2015, German carmaker Daimler's Mercedes-Benz was fined $56.5 million because it fixed the cost of its vehicles and spare parts in the country.

Audi, Volkswagen's premium arm, was fined $40.5 million, and Fiat Chrysler Automobiles' Chrysler brand received a smaller penalty in 2014 on similar charges of enforcing minimum sales prices.

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