The Competition Commission of India (CCI) has imposed a fine of Rs 200 crore on car maker Maruti Suzuki India Ltd (MSIL) for indulging in unfair business practices.
The fine has been slapped for “indulging in anti-competitive conduct of Resale Price Maintenance (RPM) in the passenger vehicle segment by way of implementing Discount Control Policy vis-à-vis dealers,” the regulator said in a release on Monday.
Besides, the watchdog has directed the company to cease and desist from indulging in anti-competitive practices.
The regulator found that MSIL had an agreement with its dealers whereby the dealers were restrained from offering discounts to the customers beyond those prescribed by the company, the release said.
The CCI keeps a tab on unfair business practices across sectors.
The CCI had in 2019 started looking into allegations that Maruti forces its dealers to limit the discounts they offer, effectively stifling competition among them and harming consumers who could have benefited from lower prices if dealers operated freely.
In an order, issued after an investigation that began in July 2019, the CCI had asked Maruti to “cease and desist” from indulging in such practices and asked the company to deposit the fine within 60 days. Maruti, which sells one in every two cars in India, is majority-owned by Japan’s Suzuki Motor Corp. Commenting on the CCI report a company spokesperson from Maruti Suzuki India said, “We have seen the order dated 23 August 2021 published by the Competition Commission of India. We are examining the order and will take appropriate actions under law. MSIL has always worked in the best interests of consumers and will continue to do so in the future.”
Maruti, however, told the regulator during the probe that there was no discount control policy that it imposed on dealers who were free to offer any discounts they wished to their customers, the order said.
The CCI order, however, contained extracts of several emails exchanged between dealers and Maruti officials, which made it “evident that the Discount Control Policy was controlled” by Maruti and not its dealers.
Also Read: CCI Probe Found Maruti Suzuki Stops Dealers From Giving Extra Discounts: Report
Carmakers at times set a limit on discounts its dealers offer to prevent price wars among them, but Indian law says the practice, described as “resale price maintenance” is prohibited if it adversely impacts competition.
The CCI order said Maruti not only indulged in such activities with its dealers but also imposed penalties on those who didn’t abide by its instructions.
The watchdog said it had taken a considerate view in imposing the $ 27 million penalty, keeping in mind the post-pandemic phase of recovery of the automobile sector.