General Motors is being investigated in China for anti-trust violations, but the risk of any serious damages or penalties to the automaker apperas to be quite low.
That’s because the Chinese government’s 10-year-old anti-monopoly law is primarily used remind foreign companies that the country is still in charge in its home market, thereby keeping the firms on their toes. In fact, China’s central government agencies investigate thousands of anti-trust cases as part of a required process that calls for an investigation.
“As long as we receive a public tipoff about price manipulation, we will launch a probe,” said a representative from the National Development and Reform Commission.
Legally, anti-trust fines can be as high as an eyebrow-raising 10 percent of a company’s revenue in the prior year. Historically, however, threat associated with anti-trust penalties have been much worse than actual fines.
It’s worth noting that China has investigated GM China (or Shanghai GM, as the unit is legally called) in the past. The probes did not result in fines. It’s also notable that Shanghai GM is an equal-ownership joint venture between General Motors and China’s Shanghai Automobile Industry Company (SAIC), making it interesting to see how far China is willing to go to penalize one of its own automakers even if the joint venture is guilty of any anti-trust behavior.