Whistleblowing Automaker Sparks Spain Pricing Probe

MADRID – A whistle-blowing automaker has triggered a price-fixing probe that could cost some Spanish auto dealers penalties of up to 10% of their profits from the last fiscal year.

A government watchdog agency, the Commission for Market and Competition (CNMC), since June 2013 has been investigating dealers in the distribution networks of Audi, SEAT, Volkswagen, Nissan, Toyota, Land Rover, Hyundai and Opel.

The probe was launched after Volkswagen Group’s Spanish subsidiary, SEAT, submitted documents containing the initial allegations and asked that it, parent VW and VW’s Audi luxury brand either be exonerated or have their fines significantly reduced.

A total of 114 companies have been investigated by the CNMC for allegedly agreeing to a maximum 4% discount in official list prices, including taxes.

According to Cinco Dias, a Spanish financial daily newspaper, some of the dealers have acknowledged receiving notification of the CNMC’s findings. The commission neither confirms nor denies the report.

Some analysts speculate VW Group anticipated the investigation and suggested to SEAT that it take the initiative and alert the CNMC. The analysts say the automaker may have been trying to protect its Spanish subsidiary, which lost €149 million ($188 million) and has lost more than €1.5 billion ($1.9 billion) since 2005 but is seeing sales recover, particularly in Germany.

Sources within Spain’s auto-retailing industry counter by saying the country’s vehicle market is highly competitive. They cite government statistics indicating the price of a car in Spain is 15% lower than in 2008, and note cars sold in the country generally are better equipped than in other European markets.

Dealers warn the severe penalties proposed by the CNMC not only could short-circuit a financial recovery that only recently has begun, but also could force many of them out of business.

A Snap-on Business Solutions study determined dealer profits improved 0.1% in the first quarter compared with the prior year, after roughly breaking even in 2013. It is generally recognized dealers suffered substantial losses from 2009 to 2012.