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.
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.
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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.
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.