Discounting is a big part of business strategy in India, but according to a Reuters exclusive report, one major company has taken the anti-competitive route to get things done.
The report alleges that Maruti Suzuki, the country’s largest car maker is being probed by the Competition Commission of India (CCI) for resorting to practices of controlling how discounts are offered by its dealers in the country.
This has been mentioned by unnamed sources in the report and a detailed investigation on the matter could do damage to the company.
The probe primarily states that Maruti Suzuki has been limiting the discounts that its dealers could offer on its range of cars. This is seen as anti-competitive conduct by the CCI and the source quoted in the story believes the company might have stifled competition among dealers, forcing them to limit discounts they offer on cars to consumers.
Hyundai was found guilty of similar charges in 2017, but with about 14 percent market share, the South Korean company managed to avoid paying a $12.5 million fine. The case is still pending after CCI challenged the ruling in the Supreme Court.
But if strong evidence proves Maruti Suzuki guilty then the company won’t have the excuse of being a small player to counter the charges, the anti-trust official was quoted as saying in the report.
You’re talking about a company with over 51 percent market share, where most of its cars sell more than 2,000 units every month across different price points. The implications of anti-trust practices are bound to be catastrophic, unless Maruti Suzuki can prove these allegations are baseless and doesn’t merit punishment.
The report points out, quoting a source that allegations against the company have been going on for around 10 months, but it’s still not clear the around which period the investigation will take place.
Whichever way you look at it, Maruti Suzuki has a big job on its hand to quash these concerns, which could invariably hurt shareholder sentiments as well.
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