Antitrust regulator is looking into allegations that Maruti Suzuki, the country's biggest car maker, pushes buyers to purchase insurance policies offered by the company, two sources with direct knowledge of the matter told Reuters.
The Competition Commission of India (CCI) in June last year received an anonymous complaint alleging insurance plans recommended by Maruti while selling cars resulted in customers paying more compared with other options in the market.
Based on the complaint, the CCI is assessing whether Maruti has engaged in so-called "tie-in arrangements", in which a car maker promotes preferred suppliers of complementary goods such as lubricants or insurance, the sources said.
Law says such practices are anti-competitive if they end up stifling competition and limiting consumer choices.
The Commission is looking into the complaint and "it will take a while", said one of the two sources, who declined to be named as the case details are private.
In response to Reuters questions, a Maruti spokesman said: "We are not aware of any such alleged complaint that is being investigated by CCI and therefore cannot comment on the same."
The CCI did not respond to a request for comment.
The watchdog can still throw the complaint out if it finds no merit in the allegation, or order a deeper probe by its investigations arm.
Maruti is already the subject of another antitrust investigation in India. Last year, the CCI ordered its investigations unit to probe allegations the carmaker limits discounts its dealers can offer, a prohibited anti-competitive practice if it hurts consumers.
If the CCI decides to launch a wider probe into the new complaint, it could ask its investigation unit to wrap it into the ongoing case into Maruti's discounting practices, or order a fresh investigation, the second source said.
It was not clear over what period the anonymous complaint about insurance sales relates to.
Maruti, majority-owned by Japan's Suzuki Motor, is a market leader in India with a 50 per cent share of the passenger vehicles market. It sold 1.73 million cars in the fiscal year ending March 2019 and has around 3,600 sales outlets.
The allegation of insurance tie-up arrangements against Maruti is similar to an earlier complaint against its competitor, South Korean carmaker Hyundai Motor Co, a third source aware of the complaint told Reuters.
In 2014, following a complaint from a car dealer, the CCI found initial merit in the allegations that Hyundai had entered into several tie-in arrangements, including to promote certain insurance companies, and ordered a wider investigation.
However, in its final order in 2017, the CCI said Hyundai's insurance arrangements were not anti-competitive.
"The most credible way for Maruti to show there is no tie-in would be by providing actual data on Maruti car buyers opting for insurers other than those recommended by it," said Rahul Rai, a New Delhi-based lawyer specializing in antitrust law.