CCI slaps fine of Rs 200 crore on Maruti Suzuki over dealer discount policy

The Competition Commission of India (CCI) on Monday imposed a fine of Rs 200 crore on the country’s biggest carmaker Maruti Suzuki India Ltd (MSIL) for anti-competitive practices related to how it forced dealers to discount cars.
 
“The CCI passed a final order against MSIL 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, and accordingly, imposed a penalty of Rs 200 crore upon MSIL, besides passing a cease-and-desist order,” according to the CCI order.
 
During the probe, Maruti — which has more than 50 per cent share of India’s car market — told the regulator that it imposed no such policy and that the 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.
Carmakers at times set a limit on discounts their 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.’
 
“We have seen the order. We are examining it 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,” a company spokesperson said in a statement.

 
The CCI had launched an investigation into the allegations in 2019. It was probing whether 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.