The Competition Commission of India (CCI) on Thursday ordered a detailed probe into domestic automobile major Maruti Suzuki India Ltd (MSIL) after allegations of the company having a resale price maintenance arrangement with dealers.
Resale price maintenance usually refers to an arrangement between a buyer and seller wherein the resale price is stipulated by the seller. According to the CCI’s order, it has been alleged that MSIL’s dealers in a particular region are not permitted to give extra discounts to their customers and if a dealer is found offering discounts more than the permitted level, a penalty is levied.
The ten-page order noted that the present case was initiated after an e-mail was sent by a purported dealer anonymously against MSIL, alleging resale price maintenance being resorted to by the carmaker in certain areas. It has also been alleged that a similar discount control policy is implemented by MSIL across India, specifically in cities where more than five of its dealers operate.
According to CCI, MSIL has said in its response that it does not exercise control or supervision over the dealers, except to maintain a balance between the 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, it said.
However, 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 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 said it is of the considered opinion that a detailed investigation is required.
Emailed complaint
Case was initiated after an e-mail was sent by a purported dealer anonymously alleging resale price maintenance
Allegation denied
MSIL said that it does not exercise control or supervision over dealers, except to maintain buyer satisfaction and uniformity in schemes