Recently, China’s anti-monopoly regulator announced its decision on fining Audi, Chrysler and their distributors RMB 280 million. According to press release, Hubei Price Bureau fined Faw-volkswagen Marketing Co. Ltd. (“Catch-all Distributor of Audi”) RMB 248.58 million and its eight sub-distributors in Hubei province were fined RMB 29.96 million. Furthermore, Shanghai Price Bureau made a penalty decision on Chrysler (China) Automobile Sales Co., Ltd. and its three distributors in Shanghai with Chrysler was fined RMB 31.682 million and its three distributors were fined a combined amount 2.1421 million.
According to media report, FAW-Volkswagen and Audi distributors in Hubei province reached a monopoly agreement for the purpose of fixing price of vehicle sales and post-sale maintenance fees, which is condemned by AML as vertical-monopoly-agreement. Apparently, Chrysler adopted a manifest RPM that contained such terms as maintenance of resale price(RPM), publishing business policies containing RPM, as well as imposing punishments on the dealers whose quoted price or sales price are lower than the suggested retail price. Meanwhile, such acts also constitute the horizontal monopoly agreement. It is the first-ever punishment to vertical monopoly agreement taking place in automobile sector, and hallmarks a first punishment on both vertical monopoly and horizontal monopoly in one single case.
Reasoning of Audi and Chrysler case once again demonstrated the application of "Per Se Rule" on RPM by National Development and Reform Commission (NDRC), which is as controversial and not inconsistent with NDRC⊙s long-standing attitude toward RPM in its previous investigations. Seemingly China anti-monopoly regulators are currently getting in line with the enforcement of anti-trust rules by European Union in Automobile industry. EU considers RPM in new car sales as the hard-core restriction, which is presumed to affect competition and thus hard to be exempted by TFEU article 101(3), unless the enterprise can raise substantiate efficiency defense and successfully prove that its conducts contribute to the welfare of public interests.
In China, it is probably the case that some automakers adopt minimum resale prices not only to automobile sales but also to auto parts sales Besides,probably they prohibited 4S stores (the authorized automobile distributors) from reselling components and auto parts to other 4S stores and independent maintenance enterprises，and prohibited their auto parts suppliers from selling products to the independent maintenance enterprises. Such acts are literally in conflict with AML, which is exposed to possible further investigation by Chinese anti-monopoly regulators.
It is worth noting that, in Audi case, Wuhan Aojia, one of the distributors under investigation, was exemptedpenalty from being punished for its “light and minimal legal offences (de minimus) that are corrected promptly and to the extent that have not caused no harmful consequences”(the de mininus rule). Such exemption was based on Article 5 of Several Provisions on Regulating the Authority of Price-related Administrative Penalties, which provides that no punishment isbe exemption to be given to de minimus harmful consequencesoffences. Article 6 also stipulates that those enterprises, whose price-related illegal activities have been initiatively and promptly corrected to the extent that harmful consequences are eliminated or reducedshall qualify a lesser penalties. Multinationals may consider using this de minimus rule to avoid or reduce penalties, if any.