FTC to focus investigation on pricing policy and distribution system


Antitrust authorities have launched an investigation into local importers and distributors of overseas brand cars for alleged unfair business practices such as over-pricing, industry sources said Sunday.

The Fair Trade Commission, the sources said, sent an official notification to importers of the big four car makers ― Mercedez-Benz Korea, BMW Group Korea, Audi Volkswagen Korea and Toyota Motor Korea ― to ask for cooperation in the probe.

The antitrust regulator plans to start on-site inspections after the ongoing written investigation is completed as early as Monday, according to the sources.

“We cannot confirm anything on the investigation. If illegal activities are found, we will respond strictly according to the law,” an FTC official said.

The FTC investigation is expected to focus on the pricing policy and distribution system of import cars amid consumers complaints about high prices, especially those of European vehicles, even after the Korea-EU free trade pact took effect in July.

Unlike expectations for moderate price cuts, most local importers have raised or maintained car prices in recent months.

Mercedez-Benz Korea increased the prices of some models by an average of 0.5 percent from this year, while BMW Korea set the new 528i sedan at 67.9 million won, up 0.7 percent from the previous model.

High repair costs will also be inspected, as they are believed to have driven up car prices overall.

In a low-speed crash test by Korea Insurance Development Institute, parts prices of import cars were 6.3 times more expensive than Korean cars. For coatings, the difference was 3.4 times.

Industry sources also predict that the ongoing investigation could be expanded to look into prevalent unfair business practices between importers and dealers.

Volkswagen last year dispatched an inspection team to Korea after finding shady deals regarding the sale of used cars and its dealers.

The German head office of Mercedez-Benz reportedly found in December that its Korean importer and Hansung Motor, the biggest dealer with an almost 50 percent market share, had exchanged business favors. 

A spokesperson for Mercedez-Benz Korea, however, denied the speculation that Hansung, which is also the second-largest shareholder of the local importer with a 49 percent stake, could have been involved in raising car prices to seek higher dividends. 

With more foreign companies expanding their marketing and businesses here, the nation’s import car market saw the number of newly registered vehicles surpass the 100,000 mark for the first time last year.

By Lee Ji-yoon (jylee@heraldcorp.com)