The European Commission has fined Volkswagen euro 30.96 million for a "serious" infringement of competition rules.
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European competition commissioner Mr Mario Monti
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It found that in 1996 and 1997 the company told its German VW dealers not to sell its new Passat at prices below the recommended retail price.
"The measures, which aimed at maintaining prices at an artificially high level in a market where new car prices are already among the highest in Europe, constitute by their nature a very serious infringement of European competition rules and must be met with an appropriate sanction," European competition commissioner Mr Mario Monti said in a statement.
Measures taken to limit discounts aim at fixing retail prices and represent a "hard core" restriction of competition, the commission said, adding that such measures run counter to EU law.
Price comparisons over the past few years show new car prices before tax for VW models in Germany are substantially higher than in all EU countries except Britain, it said.
The commission found VW sent several circular letters to its German dealer network urging them not to sell the VW Passat at prices considerably below those recommended and to limit, or not grant, discounts to customers.
VW also sent individual letters that threatened legal consequences, such as the termination of their dealer contract, if dealers disobeyed instructions, it said.
AFP