Industry

‘CCI probing if Maruti forced its dealers to limit their discounts’

Such a practice potentially hurts competition and customers

India’s antitrust regulator is looking into allegations that Maruti Suzuki, the country’s biggest car maker, resorted to anti-competitive practices by controlling how its dealers discounted cars, three people aware of the matter said.

Maruti sold 1.73 million passenger vehicles in the year to March and has nearly 3,000 dealers in the country.

The Competition Commission of India (CCI) is looking into allegations that 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, the people told Reuters.

Under review

It was not clear over which period Maruti allegedly engaged in this conduct, but one of the people with direct knowledge of the case said the CCI had been reviewing the allegations for about 10 months. A final decision on whether there needs to be a full investigation has not been reached, the person added. The sources declined to be identified as details of the case were not public. Maruti Suzuki and the CCI did not respond to Reuters’ requests for comment.

Automakers typically sell cars at wholesale prices to dealers, who sell them to customers at a higher retail price that includes their commissions.

Car makers at times set a limit on discounts its dealers could offer to ensure there is no price war among them, two of the sources said, but Indian law says the practice, described as ”resale price maintenance,” is prohibited if it causes “appreciable adverse effect on competition in India”.

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Printable version | Jul 8, 2020 3:40:56 AM | https://www.thehindu.com/business/Industry/cci-probing-if-maruti-forced-its-dealers-to-limit-their-discounts/article27199526.ece

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