Benz Korea Turned Deaf Ear to Fair Trade Commission

By Park Sae-jin Posted : August 22, 2010, 15:35 Updated : August 22, 2010, 15:35

(아주경제 신기림 기자) Mercedez-Benz Korea turned a deaf ear to corrective measures of Korean Fair Trade Commission (FTC).

According to the industry source, Benz Korea keeps ‘One-price’ sales strategy though the watchdog ordered the company to stop its resale price maintenance activities and remove related clauses from its dealership contracts.

The strategy is considered a type of price fixing scheme to ask dealers to follow the pricing scheme, which is a clear subject for fine taxation.

The prices of the German automobiles have been the subject of attention for being much higher in comparison to other countries, raising allegations that Mercedes-Benz Korea may be involved in a price fixing scheme.

A source said that Benz Korea still ignores the order from FTC by sending all dealerships operating guidelines that prevented them from conducting a variety of marketing activities under the free competition rule.

Sales representatives in Benz dealer shops have no choice but to return some of commission from the car leasing in order to boost sales, the source said. They are compelled to accord with Benz policy though One-price strategy contributes to decrease in sales.

The dealers even pay themselves for fringe benefits such as gifts for customers for competition.

“Benz Korea’s price strategy has a severe problem of giving loss to both dealers and clients and it needs an urgent improvement for the sake of market economy,” one dealer said.

Benz Korea has already received a notice of correction order from FTC back in 2007 saying that the cessation of the company’s resale price maintenance activities would lead to increased competition among dealerships and help reduce the price of Mercedes-Benz vehicles in Korea.
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