The Competition Commission of India (CCI) has imposed a penalty of Rs 200 crore on Maruti Suzuki India Ltd over anti-competitive practice of imposing a discount control policy, thereby restricting dealers from offering higher level of concessions to the consumers.
Competition Commission of India imposed a penalty of Rs 200 crores upon Maruti Suzuki India Limited for indulging in anti-competitive conduct of Resale Price Maintenance in passenger vehicle segment by implementing discount control policy: Ministry of Corporate Affairs pic.twitter.com/8jDkJWjvw8— ANI (@ANI) August 23, 2021
The anti-trust body said in its order that Maruti Suzuki not only entered into an agreement with its dealers across India for the imposition of discount control policy amounting to retail price maintenance (RPM), but also monitored the same by appointing Mystery Shopping Agencies (MSA) and enforced the same through the imposition of penalties, which resulted in "appreciable adverse effect on competition" within India.
The CCI has directed MSIL to cease and desist from indulging in RPM directly or indirectly, which has been found by the commission in the present order to be in contravention of the provisions of Section 3(4)(e) of the Act.
"Having considered the nature of the infringing conduct and the post-pandemic phase of recovery of automobile sector, the Commission takes a considerate view and deems it appropriate to impose a penalty of Rs 200 crore only upon MSIL, as against a maximum penalty permissible under the provisions of the Act, which may extend up to ten per cent of the average of the turnover of the entity for the last three preceding financial years," it said.
The investigation found that each and every discount offered by the dealers of the MSIL over and above the customer offers of the MSIL, had to be permitted by the MSIL. If discount without prior approval was given, the imposition of a penalty was threatened.
The dealers were informed by the MSIL that no discounts above the stated discounts are to be offered to consumers. Additionally, the MSIL dictated that any dealership, after price rise, if found selling/billing on old price, will be considered violating selling norms and it will be treated as a discount offered to customers.
The MSIL circulated communications of warning and threats of imposing high penalties in case dealers offered extra discounts without prior approval, the CCI order said.
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