BMW fined for blocking direct imports

Were Swiss consumers taken for a ride by BMW? Keystone

BMW, the world's biggest premium carmaker, has been fined SFr156 million ($163 million) for preventing Swiss residents from buying its cars abroad after the strong franc made prices in Switzerland up to a quarter higher.

The franc has soared since the global financial crisis erupted, prompting many Swiss consumers to cross the border to shop in Germany, France or Italy, importing goods back to Switzerland and hurting the retail sector in the country.

The Federal Competition Commission fined BMW as a result of an investigation it launched in 2010 following complaints from consumers who had tried and failed to buy cars abroad from BMW and its Mini brand.

The regulator said on Thursday a clause in BMW’s contracts with dealers in the European Economic Area (EEA) banned sales to customers outside the zone in an attempt to block direct imports to Switzerland and protect its car dealers in the country.

The EEA includes the 27 members of the European Union, as well as Iceland, Liechtenstein and Norway.

“Customers in Switzerland could not profit from the significant exchange rate advantages,” the commission said in a statement. “The sealing off of the Swiss market led to lower competitive pressure on the sales prices for new cars from BMW and Mini.”

The fine is the third largest sought by the antitrust agency, only behind two others worth SFr333 million and SFr220 million the commission ordered telecommunications company Swisscom to pay in 2007 and 2009. It is based on estimates of the car company’s turnover over the past three years.

Appeal

BMW said it plans to appeal against the fine within the legal deadline of one month.

“We categorically reject the accusations, the argumentation and the amount of the fine,” said a spokeswoman for the German company, adding that BMW adhered to all laws governing both Switzerland and the EEA.

The head of the competition commission, Vincent Martenet, said he did not fear an appeal, adding that the proof was strong enough to uphold the regulator’s decision.

Taking the average exchange rate over the year from October 2010 when it launched the investigation, the Swiss regulator said BMW cars were for example 20 to 25 per cent cheaper in Germany.

It said while direct imports of most car brands had soared since 2008, they had been relatively flat for BMWs and Minis.

Consumer organisations hailed the decision, saying that it would show firms that they could not treat the Swiss any way they wanted and that it would drive down the price of imports.