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Ford JV fined millions in China

By Graeme Roberts | 5 June 2019

China's market regulator has fined Ford's main joint venture CNY162.8m (US$23.55m) for violating anti-monopoly laws.

Reuters said Ford was the latest automaker with foreign partners to face such penalties.

The State Administration for Market Regulation (SAMR) said on its website that the joint venture with Chongqing Changan Automobile, Changan Ford, had breached the law by setting a minimum resale price for its cars in the Chinese municipality of Chongqing since 2013.

The joint venture, which is owned 50:50 by Ford and Changan Auto, did not provide evidence that this complied with the country's anti-monopoly law during the investigation, it said.

"Changan Ford's actions deprived downstream dealers of their pricing autonomy, excluded and restricted competition within the brand, as well as damaged fair competition in the market and consumer's legal interests," it said.

The fine is equivalent to 4% of the joint venture's sales in Chongqing last year, it said.

Changan Ford told Reuters it respected the regulator's decision and had taken corrective action in its regional sales management together with its dealers.

"Changan Ford will continue to ensure its business activities contribute to a free and fair competitive environment," it said.

Reuters noted that other automakers which have been punished by China for violating its anti-monopoly laws in the past include General Motors' joint venture, which was fined $29m in 2016, as well as Audi and Fiat-Chrysler.

Some analysts told the news agency setting of such minimum resale prices was not unusual in China.

"Every automaker makes efforts to protect its brand's resale value. Sometimes their actions might be seen as crossing a line such as with price basements," said Michael Dunne, chief executive officer of California-based consultancy ZoZo Go and a former General Motors executive.

Dunne added the fine could be seen as a "warning shot". "China could at any time and for any number of reasons launch a wholesale investigation of any global automaker's operations in China. That is the reality," he said.

Ford and Lincoln cars faced unusual delays at customs in May 2018 when trade tensions between the two countries began escalating.