THE EC increased pressure on car manufacturers to push down prices with two new probes into Peugeot and Volkswagen. EC inspectors raided the headquarters of Peugeot and its German and Dutch distributors amid claims it was blocking cross-border trade of vehicles.

A Peugeot spokesman said: 'We are confident we have complied with all EC requirements and we have nothing to hide in these matters.' He also stressed the investigation was limited to Peugeot in France and Germany.

At a briefing in Brussels, an EC spokesman revealed Volkswagen was also under investigation for allegedly keeping prices high with threats of legal action to dealers. A spokesman for the EU said: 'We are looking into prices following a complaint from a German car dealer, but it is early days yet.' Volkswagen was unable to comment.