NEW DELHI (Reuters) - India's antitrust body on Thursday said it had ordered an investigation into how carmaker Maruti Suzuki (NS:MRTI), the country's biggest car maker, controlled discounts its dealers could offer.
Reuters reported in May the Competition Commission of India (CCI) was looking into allegations that Maruti forces its dealers to limit the discounts they offer, effectively stifling competition among them and harming consumers.
Car makers at times set a limit on discounts to ensure there is no price war among dealers but Indian law says the practice, described as "resale price maintenance", is prohibited if it causes "appreciable adverse effect on competition in India".
The CCI on Thursday said a detailed probe was needed to assess the methods used by Maruti as the "allegations prima facie reveal a fit case for investigation in respect of the alleged resale price maintenance arrangement".
Maruti, majority-owned by Japan's Suzuki Motor Corp (T:7269), did not immediately respond to a request for comment.
The company is a household name in India where it commands a 51 percent market share. It sold 1.73 million passenger vehicles in the year to March and has nearly 3,000 dealers in the country.