• Friday, March 29, 2024

Business

India’s biggest carmaker fined £19.6mn over dealer discount policy

Representational Image (Photo by Chandan Khanna/AFP via Getty Images)

By: Shubham Ghosh

INDIA’S antitrust regulator Competition Commission of India (CCI) has fined Maruti Suzuki, the country’s largest carmaker, Rs 2 billion (£19.6 million) for anti-competitive practices related to how it forced dealers to discount vehicles, it said in an order issued on Monday (23).

In 2019, the CCI started looking into allegations that Maruti forces its dealers to limit the discounts they offer, resulting in stifling competition among them and hurting consumers who could have gained from lower prices had the dealers operated freely, Reuters reported.

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In an order, which was issued after an investigation that started in July the same year, the CCI asked the auto-manufacturer to “cease and desist” from engaging in such practices and asked it to deposit the fine within a time frame of 60 days.

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Maruti, which sells one in every two cars in India and is majority-owned by Japan’s Suzuki Motor Corp, told the regulator during the investigation that there it did not impose any discount control policy on the dealers who were free to offer any discounts they wished to the buyers, the order said.

The regulator’s order, however, had extracts of several emails that were exchanged between dealers and officials at Maruti, which made it “evident that the Discount Control Policy was controlled” by the automaker and not its dealers, the report added.

At times, automakers put a limit on discounts its dealers offer to prevent price wars among them but under the Indian law, the practice, called “resale price maintenance” is not allowed if it adversely affects competition.

According to the CCI order, Maruti not only engaged in such activities with its leaders but also fined those who didn’t abide by its instructions.

The CCI said it took a considerate view while imposing the penalty on the carmaker in view of the post-pandemic recovery in the automobile sector.

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