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Home > News > Industry Activities > Europe Car-part Makers Rebel over China's Exclusivity Deals

Europe Car-part Makers Rebel over China's Exclusivity Deals

By Tom Mitchell , 2014-09-11 10:35:41

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European auto parts suppliers have claimed carmakers in China forced them to sign exclusivity agreements that broke the country’s anti-monopoly law and pushed up prices for spares.

These new accusations add to the pressure on multinational carmakers operating in China, which have been the focus of a long-running antitrust investigation by Chinese regulators.

The National Development and Reform Commission, one of three bodies responsible for enforcing China’s 2008 anti-monopoly law, is looking into whether car companies attempted to influence the retail prices set by their dealers for vehicles, spare parts and services.

In their submission to the EU Chamber of Commerce in China, released in Beijing on Tuesday, more than 100 car parts makers complained that “sales of original parts to the independent after-market are often restricted by vehicle manufacturers”.

“Restrictions imposed on [car parts companies] limit the choice for consumers in the independent after-market and force them to choose between either stores controlled by vehicle manufacturers, that often charge a significant premium, or the fake products market,” the EU Chamber’s automotive working group said.

The car parts makers added that such restrictions constituted “monopoly agreements” that are prohibited under the anti-monopoly law, noting that similar arrangements had been banned by the EU.

The EU chamber’s working group said multinational car companies’ sourcing practices were consistent with government guidelines implemented in 2005.

“Both European automotive and automotive component manufacturers have a common interest in gaining clarification from the Chinese authorities on the contradictions between the 2008 Anti Monopoly Law and the 2005 Administrative measures,” the carmakers’ group said.

Unlike their car company clients, which are required to operate through 50-50 joint ventures with domestic partners, foreign auto parts companies can own 100 per cent of their China operations.

One auto parts executive involved in drafting the report declined to identify any of the multinational car companies that enforce such exclusivity arrangements, but said: “This is a widespread topic that we hope will be solved by the authorities”.

However, the public airing of a disagreement between companies represented by the EU chamber is unusual. Until now, the chamber had been openly critical of the Chinese government’s recent handling of antitrust cases and raised doubts about its commitment to state sector reform.

Joerg Wuttke, EU chamber president, warned that a “golden age” for foreign investment in China was coming to an end as the country’s growth rate continued to slow and more foreign companies and executives found themselves the subjects of Chinese regulatory and even criminal investigations.

Investment by European and US companies in China fell 18 per cent in the first six months of this year compared with the same period in 2013, while Japanese investment was only at half last year’s levels.

“Our member companies see a deterioration in the marketplace,” Mr Wuttke said. “The economic slowdown has hit everybody and some regulatory issues have come up that put more constraints on foreign businesses?.?.?.?It is perceived to be a market that is more difficult to handle and our members have indicated to us that they are looking for choices [to invest] outside China.”

Mr Wuttke was also critical of Chinese police investigations into the former head of GSK’s China unit and a British investigator, Peter Humphrey, who worked under contract for the UK pharmaceutical group and was jailed last month for alleged violations of privacy laws.

“The cases that we have seen with GSK and Peter lacked transparency,” Mr Wuttke said.


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