China's competition watchdog has forced luxury carmakers into a U-turn. The whiff of a probe into vehicle parts was enough to get Audi and Jaguar Land Rover to reduce their prices, even though neither has been publicly deemed to be abusing its position. Experience shows in China it is better to admit guilt early than risk bigger fines, or lose access to a critical market.

China's car industry is the world's biggest by new vehicles sold, so the adjustment to profit isn't small. But waiting for a potential fine could have been worse. Under China's 2008 anti-monopoly law, companies found to be abusing their market dominance to fix prices can be fined up to 10 percent of annual group revenue. Using the broadest legal definition, that could mean a potential fine of roughly 5 billion euros ($6.7 billion) for Audi. More important may be maintaining good relations with a fast-growing luxury car market, which McKinsey expects will be the world's largest by 2016.

It's hard to imagine carmakers being so quick to self-rectify in any other market. The old Chinese idea of "lenience for those who confess, harshness for those who resist" is presumably one motive, which may also explain why some foreign contact lens makers who cut prices early were fined just $600,000 each in May, while milk powder group Danone ended up paying almost 50 times that. Their willingness to back down is understandable - though the precedent they set may come back to haunt them.

The author is Ethan Bilby, a Reuters Breakingviews columnist.

Reuters