By Yoon Ja-young
The Fair Trade Commission (FTC) levied a 1.79 billion won ($1.58 million) fine on Mercedes-Benz Korea and eight dealers of the German car here for colluding to raise repair and maintenance fees.
According to the FTC, the eight dealers including Han Sung Motor, The Class Hyosung, JoongAng Motor and Star Motor, had meetings at the Han Sung Motor office and the Mercedes-Benz Korea office in the first half of 2009. They colluded to raise hourly labor fees for repairs and maintenance to enhance their revenue of after-sales service.
“They are official dealers of Mercedes-Benz, selling the cars as well as operating a repair and maintenance business in Korea,” the FTC noted.
The anti-trust watchdog pointed out that the dealers colluded to raise the hourly labor rates they charge Mercedes-Benz owners for maintenance and general repairs.
Mercedes-Benz Korea imports Mercedes-Benz cars and components from Daimler AG in Germany. Then it sells the cars wholesale to the eight dealers here, who are engaged in the retail car business.
For repair and maintenance, however, each of the dealers operates their own repair and maintenance service center, charging their customers hourly rates on labor.
According to the FTC, Mercedes-Benz Korea suggested to the dealers they should meet to discuss raising maintenance and repair fees beginning in January 2009. It suggested the target revenue for the after-sales service business, and demanded that the dealers submit their financial information to determine how much the fees should be raised.
Based on the data they had submitted, Mercedes-Benz Korea held a meeting with the dealers in May 2009, notifying them of the details of the hike such as when and by how much prices be raised. Following the collusion, the eight dealers raised the hourly charges starting from the very next month.
Since price rigging violates anti-trust and fair trade regulations, the FTC levied penalties totaling 468 million won on the eight dealers, while Mercedes-Benz Korea faced a 1.32 billion won penalty for encouraging the dealers to collude.
The imported car market is growing steeply in Korea, with imported cars taking 15.5 percent of registered cars as of 2015, more than double the 6 percent marked in 2008. Mercedes-Benz Korea sold 19.3 percent of imported cars here in 2015, by the number of the cars registered.
A spokesman for Mercedes-Benz Korea said that the company does not agree with the FTC’s decision, adding that it will appeal the ruling.