Highlights
- Competition Commission of India (CCI) is probing allegations on Maruti Suzuki for anti-competitive conduct by controlling how its dealers discounted cars
- The CCI is probing into the matter that Maruti pursues its dealers in order to restrict the discount they offer. Hence, enabling competition among them and affecting consumers
- This Maruti’s case is quite similar to Hyundai’s case. In 2017, the South Korean firm Hyundai Motor Co’s was fined INR 87.13 crore by CCI
Competition Commission of India (CCI) also known to be antitrust regulator is probing allegations on Maruti Suzuki, India’s biggest car manufacturer for anti-competitive conduct by controlling how its dealers discounted cars.
Maruti Suzuki, where the majority of stake is held by Japan’s Suzuki Motor Corp, is a household name in India. The automobile company sold 17.3 lakh vehicles in the 2019 up to March. It also comprises of 3,000 dealers in India.
The CCI is probing into the matter that Maruti pursues its dealers in order to restrict the discount they offer. Hence, enabling competition among them and affecting consumers who could have availed more discounts, had the dealers allowed to operate freely.
The time when Maruti engaged in such practices is not clear, but it is said to be that CCI has been analyzing the allegations since last 10 months. The decision on if there’s any need of full investigation has not been taken.
The automobile manufacturers usually sell cars at wholesale prices to the dealers, who sell it to the end consumers at a retail price which includes their commission. It is up to the dealers if they would offer more discounts and take a reduced profit margin, which they usually do.
The automakers sometimes set a cap on discounts to its dealers, to avoid any price war among the dealers. But according to Indian law this practice is unethical and described as “Resale price maintenance” which is prohibited if it causes “Appreciable adverse effect on competition in India”.
Hyundai Case
This Maruti’s case is quite similar to Hyundai’s case. In 2017, the South Korean firm Hyundai Motor Co’s was fined INR 87.13 crore by CCI for antitrust practices including resale price maintenance.
The CCI discovered Hyundai set the maximum amount of discount for its cars and that led to restriction in competition among its dealers.
Hyundai also penalised dealers who would not follow the set discount controls.
Various cars maker like Hyundai, Tata Motors, Toyota etc. All sell cars in India but Maruti is the one who has been a dominant player for decades. One of every 2 cars sold in India is by Maruti.
One of the antitrust officials said Maruti has a major control in the market and if such a big player caps restrictions over discounts then the customers are not left with many options.
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