Maruti Suzuki's resale price maintenance under scanner, CCI orders probe

The Competition Commission of India (CCI) has ordered a detailed probe against carmaker Maruti Suzuki for alleged resale price maintenance arrangement with dealers.

Generally, resale price maintenance refers to an arrangement between a buyer and seller wherein the resale price is stipulated by the seller.

It is alleged that dealers of Maruti Suzuki India Ltd (MSIL) in a particular region are not permitted to give extra discount to their customers and if a dealer is found offering discounts more than the permitted level, a penalty is levied, according to CCI.

The commission, in a 10-page order, said that the present matter arised after an e-mail was sent by a purported dealer anonymously against MSIL, alleging resale price maintenance resorted to by the carmaker in certain areas.

It is also alleged that a similar discount control policy is implemented by MSIL across India - specifically, in the cities where more than five dealers operate in a single city.

MSIL, in its response, had stated that it does not exercise control or supervision over the dealers, except to maintain a balance between satisfaction of consumers and uniformity in schemes.

Besides, there is no clause in dealership agreement which allows it to levy penalty on the dealers for providing discounts higher than those prescribed, the auto giant said.

When contacted by PTI, Maruti Suzuki spokesperson in a statement said, "We have seen the order on the CCI website. We are examining the same."

Further, though MSIL argued that there is no agreement between MSIL and its dealers which amounts to imposition of discount control policy, the commission is of the view that such a plea is misconceived since as per Competition Act, "agreement" includes any arrangement or understanding whether or not such arrangement, understanding or action is intended to be enforceable by legal proceedings.

The commission has perused the anonymous e-mail along with the attachments, response of MSIL and affidavit filed on behalf of MSIL.

The CCI order further said that MSIL's submission that there exists no agreement to control discounts, is devoid of substance and merits rejection.

Accordingly, the commission is of the considered opinion that a detailed investigation is required to be ordered as allegations prima facie reveal a fit case for investigation in respect of the alleged resale price maintenance arrangement put in place by MSIL upon its dealers.

The Commission has asked its investigation arm, director general to complete the probe within 150 days on the receipt of the order.

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