Mercedes-Benz has been found guilty of manipulating prices for after-sales services in China, according to a report by the official Xinhua news agency.
Companies like Volkswagen AG's Audi, BMW and Mercedes-Benz are all slashing prices for new vehicles and spare parts in an effort to please Chinese regulators which have accused some of them of anti-competitive behavior.
Daimler, who makes the luxury Mercedes-Benz, said this week it was cooperating with authorities and declined to comment on the news, according to Reuters.
After domestic media complaints were reported that foreign carmakers were overcharging Chinese customers the National Development and Reform Commission (NDRC), launched an investigation into the auto industry.
Fines of up to 10 percent of a company's China revenues for the previous year can be imposed by the regulator, according to Reuters.
Mercedes-Benz announced recently plans to reduce prices on some spare parts by an average of 15 percent and BMW. It added that it would cut prices by an average of 20 percent, JP Morgan said.
Audi also said it will cut prices, but didn't specify by how much.
Forcing European carmakers to lower the price of spare parts and imported vehicles could see margins in China normalize to levels currently seen in Europe, JP Morgan reported in a note earlier this summer.
"We believe that this might happen gradually over the next five years or more," the brokerage said.
If the price of spare parts and services fell 20 percent in China, Daimler and BMW's pretax profit would take a hit of around 1 percent in 2015. Volkswagen's pretax profit would fall by just under 3 percent, according to JP Morgan.
The European Chamber of Commerce in China has previously said that European companies were being unfairly targeted.
"The European Chamber has received numerous alarming anecdotal accounts from a number of sectors that administrative intimidation tactics are being used to impel companies to accept punishments and remedies without full hearings," it said last week, according to Reuters.
The NDRC said earlier this month that it would punish Audi and Fiat SpA's Chrysler for monopoly practices.
Audi, the best-selling foreign premium car brand in China, will be fined around 250 million yuan ($40.7 million), according to Chinese media.
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