The antitrust regulator of China said that Chrysler and Audi, both premium car brands in the country, will be punished for monopolistic practices.
The two car companies can be penalized by fines of up to one-tenth of their yearly sales profit in China, which is the largest car market in the world.
The National Development and Reform Commission, China's antitrust regulator, said that an investigation into Chrysler and Audi showed that they had carried out anti-competitive practices.
"They will be punished accordingly in the near future," said Li Pumin, spokesman for NDRC, in a press conference.
Chrysler is owned by Fiat while Audi is owned by Volkswagen.
Global car companies such as Audi have recently prioritized changing their price strategies in the country as the Chinese government conducts investigations on the car industry.
Local Chinese media have complained on how foreign car companies have been overcharging their customers in China for purchasing vehicles and their spare parts.
The agency also revealed that the NDRC will be investigating Mercedes-Benz, which is owned by Daimler, and has completed probes on a dozen spare part suppliers from Japan over similar anti-trust accusations.
The names of the Japanese suppliers were not revealed.
According to Li, the purpose of the penalties is to keep a healthy competition in the car market, to protect the interests of Chinese customers.
The punishment to be imposed by the NDRC has not been specified. However, under the country's six-year anti-monopoly regulations, the agency can fine Chrysler and Audi of anywhere between one percent and ten percent of the company's profits in the previous year.
"NDRC would normally set a percentage of annual sales in relevant markets as fines based on how cooperative the companies are," said automotive industry lawyer Colin Liu.
According to Automotive Foresight (Shanghai) Co. Ltd. managing director of consultancy Yale Zhang, the NDRC has imported luxury cars as their first target as the problem of monopoly is most rampant there.
Zhang also said that the penalties serve as a warning to the rest of the foreign car companies.
"If top brands like Audi gets punishment, others would know what to do."
Zhang added that the luxury cars imported into China have prices of 2.5 to three times more than the same cars in the United States.
While most see the price difference as an abuse of the market, foreign car companies have argued that they have to raise prices due to the several taxes that they have to pay to bring the cars to China.
The NDRC is also conducting an anti-monopoly investigation on Microsoft after imposing fines on multiple multinational companies for violations, including Danone and Mead Johnson Nutrition.