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

CCI orders probe against Maruti Suzuki for alleged resale price maintenance arrangement
Money Probe Friday, July 05, 2019 - 17:11

Maruti Suzuki India Limited, one of India’s largest passenger car company is in the midst of an investigation by the country’s competition watchdog, the Competition Commission of India (CCI) on the arrangement the company has made with its dealers on the resale pricing.

The accusation against Maruti is that the company enters into agreements with its dealers through which it restricts the discounts or offers the dealers offer to the car buyers. This is being done with the objective of preventing the different dealers from competing with each other. This is seen as an unfair practice and restraining competition.

CCI has said “it is of the considered opinion that a thorough and detailed investigation is required”.

The effective part of CCI’s order further states: “Agreements restraining competition are generally made in smoke filled rooms and therefore it is difficult to find formal/ written agreements. It is with this objective that the (Competition) Act has stipulated a wider definition of agreement to catch hold of such anti-competitive conduct.

"Therefore, MSIL's submission that there exists no agreement to control discounts, is devoid of substance and merits rejection".

From the above, it becomes obvious that the complaint as received was forwarded to Maruti Suzuki to file its response and it is after scrutinising the reply filed by the company that this order has been issued, rejecting the claim by the company that no case exists.

It is relevant to note here that the CCI has dealt with a similar complaint earlier, a couple of years back, to be precise, against the other major player in the automotive sector, South Korean company Hyundai Motor Co. and had imposed a fine of $12.5 million (₹85 crores). Last heard Hyundai had challenged that order in a court of law and won the first round, but CCI has gone in appeal.

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