China Fines GM $29M for Violating Anti-Monopoly Rules

DETROIT (Detroit Free Press/TNS) -

One week after media reports said China was investigating an automaker’s alleged “anti-competitive” behavior, China levied a fine of $29 million (201 million yuan) on Shanghai General Motors for violating anti-monopoly rules.

The Shanghai Price Bureau said Friday that Shanghai GM, the U.S. automaker’s venture with state-owned Shanghai Automotive Industries Corp., improperly suppressed competition by enforcing minimum prices dealers were allowed to charge for Cadillac, Chevrolet and Buick models.

Shanghai GM, of which GM owns 49 percent and SAIC holds 51 percent, is the automaker’s largest joint venture in the world’s largest auto market. GM is not the first western automaker to face such sanctions. Fiat Chrysler and Audi faced similar fines in an industry-wide investigation that began in 2014 following complaints auto buyers were being overcharged. A dozen Japanese auto parts suppliers also were fined on price-fixing charges.

“GM fully respects local laws and regulations wherever we operate,” the company said in a statement. “We will provide full support to our joint venture in China to ensure that all responsive and appropriate actions are taken with respect to this matter.”

The sanction against GM comes in the wake of heated rhetoric from President-elect Donald Trump about U.S. relations with China. Earlier in the week, the Trump transition team announced Peter Navarro would lead a newly created national trade council.

Navarro, 67, is a professor at the University of California at Irvine and an outspoken critic of China’s trade policy with the U.S., having called China “the planet’s most efficient assassin” and a “totally totalitarian” state.

The president-elect provoked Chinese leaders earlier this month when he spoke by phone with Taiwan President Tsai Ing-wen, the first time an American president or president-elect has publicly spoken to Taiwan’s leader since 1979. For the last 37 years, the U.S. has official recognized Beijing as China’s one government and has maintained only unofficial relations with Taiwan.

China’s official reaction was cautious, but editorials in the country’s Communist party-controlled media Friday underlined the extent to which Navarro’s rise has ruffled feathers in the Chinese capital.

“His appointment is another sign of the confrontational approach the incoming Trump administration seems intent on taking in relations with China,” the China Daily, an English-language newspaper, wrote in an editorial. “This is no laughing matter.”

Earlier in the week, China gave back an American underwater drone that its navy had seized.

There is no clear evidence that the Shanghai GM fine is in retaliation for Navarro’s appointment or any comments by Trump.

Setting minimum sale prices is common in many markets, but lawyers say Chinese regulators appear to regard it as an improper restraint on competition.

As China’s rate of economic growth slows, the government is concerned that Chinese-based automakers that don’t have joint venture with American or European partners won’t be able to survive. For the last several years, China reduced the tax consumers pay when buying a car, but that incentive is scheduled to expire at the end of this year.

Western automakers such as GM, Ford, Volkswagen, Honda and Peugeot Citroen have expanded their plants and want to make and sell as many vehicles as they can. For example, GM’s Buick brand sells more than four times as many vehicles in China as it does in the U.S.