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In re Alleged anti competitive conduct by Maruti Suzuki India Limited

In re Alleged anti competitive conduct by Maruti Suzuki India Limited

In re: Alleged anti-competitive conduct by Maruti Suzuki India Limited  (MSIL) in implementing discount control policy vis-à-vis dealers

Facts-

  • The case arised out of an anonymous e-mail sent by a Maruti Dealer against Maruti Suzuki India Limited (‘MSIL’) alleging essentially Resale Price Maintenance by MSIL in its West-2 Region.
  • It was alleged that dealers of MSIL in West-2 Region are not permitted to give extra discount to their customers and if a dealer is found giving discounts more than the permitted level, penalty is levied on him.
  • It was also alleged that similar Discount Control Policy is implemented by  MSIL across India – specifically, in the cities where more than 4 to 5 dealers operate in a single city.
  • MSIL, in its response, 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 and that there is no agreement between MSIL and its dealers which involves discount control policy.  
  • It was further submitted by MSIL that the “penalties” referred to in the e- mails relate to the schemes and guidelines launched by the dealers to ensure consumer satisfaction.

Issue-

  • Whether there is a vertical agreement between MSIL and its dealers for resale price maintenance?

Applicable Laws-

  • Section 2(b), Section 3(4)(e)

Application-

  • Definition of agreement includes within its purview, any tacit or informal understanding between entities. It can therefore be said even if there is no written agreement, there is an understanding between MSIL and its dealers which would be construed as an agreement.
  • The contentions of MSIL are not plausible and lack clarity. The Commission also held that it is not clear as to why dealers will appoint Mystery Shopping Agencies to check quality standards and consumer satisfaction.
  • This case is therefore prima facie a case of contravention of Section 3 (4) (e). the Commission directed the Director General (‘DG’) to cause an investigation to be made into the matter under the provisions of Section 26(1) of the Act.