India’s antitrust regulator has fined Maruti Suzuki, the country’s biggest car maker, Rs 200 crore for anti-competitive practices related to how it forced dealers to discount cars, the watchdog said in an order on Monday.
The Competition Commission of India (CCI) 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 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 and is majority-owned by Japan’s Suzuki Motor Corp, said in a statement it is examining the order and will take appropriate actions under law.
“Maruti had a ‘Discount Control Policy’ in place whereby the dealers were discouraged from giving extra discounts or freebies to the consumers beyond what was permitted by Maruti. If a dealer wanted to offer additional discounts, prior approval of Maruti was mandatory.
“Any dealer found violating the policy was threatened with the imposition of penalty, not only on the dealership but also on individuals, including direct sales executive, regional manager, showroom manager and team leader,” CCI said.
Maruti did not immediately respond to a request for comment. However, the car maker had told the regulator during the probe that there was no discount control policy and dealers 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.
To enforce the policy, the watchdog said the company appointed ‘Mystery Shopping Agencies’ who would pose as customers to find out if any additional discounts were being offered to customers.
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.