The regulator said the luxury German carmaker had pressured dealers to set minimum sales prices on some of its cars and spare parts, and given warnings to dealers who did not comply.
China has been clamping down on the auto sector, punishing foreign carmakers for price fixing for the first time last year when it fined the Chinese venture ofVolkswagen AG and a sales unit of Fiat Chrysler Automobiles a combined $46 million.
"The investigation found Mercedes-Benz and its dealers in Jiangsu came to and carried out monopoly agreements to cap the lowest sales prices of E-Class, S-Class models and certain spare parts," the Jiangsu pricing regulator said in a statement.
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A China-based Daimler spokesman confirmed the Jiangsu regulator had investigated and penalized Mercedes-Benz.
"Mercedes-Benz China accepts the decision and takes its responsibilities under competition law very seriously. We have taken all appropriate steps to ensure to fully comply with the law," he said in emailed comments to Reuters.
The Jiangsu pricing bureau said the German carmaker had violated anti-monopoly law, damaging fair market competition and harming consumer rights.
The Jiangsu pricing regulator said it had also fined some dealers of the luxury carmaker 7.7 million yuan.
Last year, Mercedes-Benz was found guilty of manipulating prices for after-sales services in China, the official Xinhua news agency reported in August. Xinhua made no mention of possible penalties at the time.
In 2013, China fined six milk powder firms a total of $110 million for price fixing and anti-competitive practices.