India’s biggest automobile manufacturer
Maruti Suzuki has been fined Rs 200 crore ($27 million) for anti-competitive practices
as it forced dealers to limit discount on cars, the Competition Commission of
India (CCI) said in an order on Monday.

The antitrust regulator had in July 2019 launched an investigation into allegations that Maruti Suzuki stifled market
competition by forcing dealers to cap the amount of discount they can offer on
cars, Reuters reported. The practice also harmed consumers, as they could have
enjoyed lower prices if dealers were allowed to operate freely.

Also Read | General Motors recalls all Chevrolet Bolt electric vehicles due to fire risk

The CCI have now directed Maruti to “cease and desist” from using such practices as well as asked the company
to deposit the fine within 60 days. The company has not responded to requests for
comments so far.

Maruti, which sells one of every two cars
in India and is majority owned by Japanese auto giants Suzuki, told the CCI during
the investigation that it did not impose any discount control policy on its
dealers, and that they were free to offer any discount they wanted.

Also Read | US starts probe into Tesla Autopilot system

However, in its order, the CCI also
highlighted a number of emails exchanged between dealers and Maruti officials, saying
they made it “evident that the Discount Control Policy was controlled” by
Maruti and not the dealers.

Automobile manufacturers often set a
discount limit their dealers can offer on cars in order to prevent price wars
among them, a practice known as “resale price maintenance”. However, Indian law
prevents the practice if it adversely affects competition.

Also Read | Government announces Rs 6 lakh crore asset monetisation scheme

In its order, the CCI also said that in
addition to imposing such restrictions on its dealers, Maruti also fined those
who did not abide by their directives. The regulator said that its Rs 200 crore-fine
was considerate, and the amount was decided after keeping the effects of the coronavirus
pandemic on the automobile sector in mind.