GM China Venture Said to Be Under Government Anti-Trust Probe

  • China has fined some carmakers over antitrust investigations
  • GM trails only VW among foreign automakers in China sales

As U.S. President-elect Donald Trump stokes talk of tariffs on Chinese goods, General Motors Co. finds itself being investigated by the Asian nation for possible antitrust violations, according to people familiar with the matter.

China is looking at GM’s retail-pricing practices, which were also the subject of fines against Daimler AG and other automakers over the past two years. Any action by the National Development and Reform Commission, which is conducting the investigation, may be subject to changes, said the people, who asked not to be identified because the information is private. Some dealerships in the SAIC-GM network were investigated over retail pricing practices, one of the people said.

The antitrust investigation comes amid strained China-U.S. relations that have gotten tense after Trump proposed placing tariffs on Chinese goods. A Communist Party newspaper last month said a “tit for tat” retaliation could follow proposals by Trump for tariffs on the world’s largest trading nation, which had $627 billion in U.S. trade in 2015. The Global Times wrote in an editorial that orders for Boeing Co. planes could be replaced with models from Airbus Group SE, and that Apple Inc.’s iPhone sales may suffer a setback.

Respecting Laws

GM fully respects local laws and regulations wherever it operates and doesn’t comment on speculation, Irene Shen, a company spokeswoman, said in an e-mail. The NDRC didn’t immediately reply to a fax seeking comment, and representatives for SAIC and the SAIC-GM joint venture weren’t immediately reachable for comment.

GM shares took a hit after the news with the stock falling 3.8 percent to close at $35.95 in New York on Wednesday. SAIC dropped 4 percent to 23.01 yuan as of 11:04 a.m. in Shanghai trading, headed for the biggest decline in five months.

Trump said in a “Fox News Sunday” interview that aired this week the One-China policy regarding Taiwan will hinge on cutting a better deal on trade. He told a crowd in Iowa last week that China would soon have to “play by the rules.”

China has used its antitrust laws to lean on foreign companies and help the competitive position of its domestic industry, said Stuart Malawer, a professor of law and international trade at George Mason University in Fairfax, Virginia.

“The Chinese government wants to protect its own companies,” Malawer said in a phone interview. “The antitrust laws have been used periodically to target foreign auto companies. In the last few weeks, the Chinese government has taken a more aggressive position because of Trump’s proclamations.”

Mercedes Fine

Last year, China fined Daimler’s Mercedes-Benz unit $56 million for monopolistic pricing practices. In 2014, the government fined Volkswagen AG and Fiat Chrysler Automobiles NV for similar practices as well as a dozen parts makers. The parts firms were fined $200 million collectively.

Retail sales by GM in China rose 8.6 percent this year through October to 3.06 million vehicles, trailing only Volkswagen AG among foreign automakers. Its German rival boosted deliveries 11 percent to 3.2 million.

The China Daily reported earlier Wednesday that the government would soon penalize a U.S. automaker for price fixing, citing an interview with Zhang Handong, director of the NDRC’s price supervision bureau. The report didn’t name the automaker or the size of the penalty.

Trump will probably discuss reported Chinese penalties against U.S. automakers when he meets with Commerce Secretary pick Wilbur Ross, according to spokesmen Sean Spicer and Jason Miller.

— With assistance by Ying Tian, Steven Yang, Yan Zhang, and David Welch

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