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India’s antitrust body fines Maruti Suzuki US $ 27 million over Dealer Discount policy

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By Aditi Shah and Aditya Kalra, Reuters New Delhi, August 23 :

India’s antitrust regulator has fined Maruti Suzuki (MRTI.NS), the country’s biggest carmaker, 2 billion rupees ($27 million) for anti-competitive practices related to how it forced dealers to discount cars, the watchdog said in an order on Monday.

The Competition Commission of India (CCI) in 2019 started 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.

In an order, issued after an investigation that began in July 2019, the CCI asked Maruti to “cease and desist” from indulging in such practices and asked the company to deposit the fine within 60 days.

Maruti, which sells one in every two cars in India and is majority-owned by Japan’s Suzuki Motor Corp (7269.T), did not immediately respond to a request for comment.

Maruti, however, told the regulator during the probe that there was no discount control policy that it imposed on dealers who were free to offer any discounts they wished to their customers, the order said.

The CCI order, however, contained extracts of several emails exchanged between dealers and Maruti officials, which made it “evident that the Discount Control Policy was controlled” by Maruti and not its dealers.

Carmakers at times set a limit on discounts its dealers offer to prevent price wars among them, but Indian law says the practice, described as “resale price maintenance” is prohibited if it adversely impacts competition.

The CCI order said Maruti not only indulged in such activities with its dealers but also imposed penalties on those who didn’t abide by its instructions.

The watchdog said it had taken a considerate view in imposing the $27 million penalty, keeping in mind the post–pandemic phase of recovery of the automobile sector.

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