A Maruti Suzuki car is displayed for sale at a B.R.B. Motorcorp Suzuki showroom in Bhaktapur, Nepal. (Photographer: Prashanth Vishwanathan/Bloomberg)

Competition Commission Orders Probe Against Maruti Suzuki

The Competition Commission of India has ordered a detailed probe against carmaker Maruti Suzuki India Ltd. for alleged resale price maintenance arrangement with dealers.

Generally, resale price maintenance refers to an arrangement between a buyer and seller wherein the resale price is stipulated by the seller.

It is alleged that dealers of Maruti Suzuki India Ltd. in a particular region are not permitted to give extra discount to their customers and if a dealer is found offering discounts more than the permitted level, a penalty is levied, according to CCI.

The commission, in a 10-page order, said that the present matter arose after an e-mail was sent by a purported dealer anonymously against Maruti Suzuki, alleging resale price maintenance resorted to by the carmaker in certain areas.

It is also alleged that a similar discount control policy is implemented by Maruti Suzuki across the country —specifically in cities where more than five dealers operate in a single city.

Maruti Suzuki in its response, had stated that it does not exercise control or supervision over the dealers, except to maintain a balance between satisfaction of consumers and uniformity in schemes.

Besides, there is no clause in dealership agreement which allows it to levy penalty on the dealers for providing discounts higher than those prescribed, the auto giant said.

When contacted by PTI, Maruti Suzuki spokesperson in a statement said, "We have seen the order on the CCI website. We are examining the same."

Further, though Maruti Suzuki argued that there is no agreement between Maruti Suzuki and its dealers which amounts to imposition of discount control policy, the commission is of the view that such a plea is misconceived since as per Competition Act, agreement includes any arrangement or understanding whether or not such arrangement, understanding or action is intended to be enforceable by legal proceedings.

The commission has perused the anonymous e-mail along with the attachments, response of Maruti Suzuki and affidavit filed on behalf of Maruti Suzuki.

The CCI order further said that Maruti Suzuki India's submission that there exists no agreement to control discounts, is devoid of substance and merits rejection.

Accordingly, the commission is of the considered opinion that a detailed investigation is required to be ordered as allegations prima facie reveal a fit case for investigation in respect of the alleged resale price maintenance arrangement put in place by Maruti Suzuki upon its dealers.

The Commission has asked its investigation arm, director general to complete the probe within 150 days on the receipt of the order.

Also read: Eight Maruti Suzuki Models Among India’s Top 10 Best-Selling Cars In May

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