CCI Imposes Rs 200-Crore Penalty On Maruti Suzuki Over Dealer Discount Policy
CCI fined Maruti for disallowing dealers from offering additional discounts without prior approval.
The Competition Commission of India has imposed a penalty of Rs 200 crore on Maruti Suzuki India Ltd. for anti-competitive behaviour over discounts offered by its dealerships. The regulator found India's largest carmaker guilty of resale price maintenance in the passenger vehicle segment.
The CCI took suo motu cognizance of the case after receiving an anonymous email in 2017. The complaint alleged that the company‘s pricing policy was against the interest of the consumers and the Competition Act. Maruti Suzuki prohibited its dealers in West-2 region (Maharashtra other than Mumbai and Goa) from offering discounts to customers beyond what was being prescribed by the company, the email alleged.
After a two-year investigation, the commission concluded that Maruti Suzuki had a discount control policy under which dealers were discouraged from giving extra discounts and freebies to consumers. The company's argument that the dealers have signed an inter-se agreement to police themselves was dismissed by the regulator.
Dealers were discouraged from giving extra discounts and freebies to the consumers beyond what was permitted by the company, the CCI pointed out.
If a dealer wanted to offer additional discounts, prior approval of MSIL was mandatory. Any dealer found violating such Discount Control Policy was threatened with imposition of penalty, not only upon the dealership, but also upon its individual persons...Competition Commission of India
The company monitored the compliance of this policy through an agency which would visit the dealerships as customers. The dealers who were offering additional discounts were then confronted by Maruti Suzuki, the CCI said.
If clarification was not offered by the dealership to the satisfaction of MSIL, penalty would be imposed on the dealership and its employees, accompanied in some cases, by the threat of stopping supplies.Competition Commission of India
Maruti Suzuki would even dictate to the dealership the mode and utilisation of the penalty amount.
Along with the Rs 200-crore penalty, the regulator has directed Maruti Suzuki to cease and desist from indulging in resale price maintenance.
The carmaker, in a statement, said it is examining the order and will take appropriate action under law. Maruti Suzuki has always worked in the best interests of consumers and will continue to do so in the future, said a company spokesperson.