An array of industries, from milk powder makers to tech firms, have been coming under the spotlight in recent years as China intensifies its efforts to bring companies into compliance with a 2008 anti-monopoly law.
That legislation allows the country's anti-trust regulator, the National Development and Reform Commission (NDRC), to impose fines of up to 10 percent of a ompany's Chinese revenues for the previous year.
The auto industry has been under particular scrutiny, with a wave of investigations in the world's biggest auto market prompting carmakers such as Mercedes-Benz, Volkswagen AG's Audi, and BMW to slash prices on spare parts in recent weeks.
The Jiangsu Province Price Bureau, which launched its investigation last month, found evidence of anti-competitive practices after raiding Mercedes-Benz dealerships in the eastern coastal province as well as an office in neighbouring Shanghai, Xinhua said in its report on Sunday.
On Aug. 5, Mercedes-Benz said it was assisting the authorities in their investigation. A spokesman for the German brand was not immediately available to comment on the Xinhua report.
"It is a typical case of a vertical monopoly in which the carmaker uses its leading position to control the prices of its spare parts, repair and maintenance services in downstream markets," Zhou Gao, chief of the anti-trust investigation at the Jiangsu bureau, told Xinhua.
The Xinhua report did not mention possible penalties. It said replacing all the spare parts in a Mercedes-Benz C-Class could be 12 times more expensive than buying a new vehicle, citing a report from the China Automotive Maintenance and Repair Trade Association.
Early this month the NDRC said it would punish Audi and Fiat SpA's Chrysler for monopoly practices. Chinese media reported last week that Audi would be fined around 250 million yuan ($40.7 million).
Industry experts say automakers have too much leverage over car dealers and auto part suppliers in China, enabling them to control prices, considered as a violation of the country's anti-trust laws.
China's government has in the past few years stepped up its enforcement of the anti-monopoly law, slapping several multinational companies, including Mead Johnson Nutrition Co. and Danone SA, with fines.
The government is conducting an anti-monopoly probe into U.S. tech giant Microsoft Corp, and regulators also recently said U.S. chipmaker Qualcomm Inc. had a monopoly.