The Competition Commission of India (CCI) has slapped Maruti Suzuki with a ₹200 crore penalty over the company's anti-competitive business practices, which prevented its dealerships from offering discounts to customers beyond a prescribed limit.
The country’s largest carmaker Maruti Suzuki has received a heavy penalty of 200 crore rupees from the Competition Commission of India (CCI) for indulging in anti-competitive business practices. According to a statement released by CCI, it found that Maruti Suzuki restrained its dealers from offering discounts to customers beyond those prescribed by the company. CCI claims that Maruti Suzuki had a ‘Discount Control Policy’ in place, which is ‘in contravention of the provisions of Section 3(4)(e) read with Section 3(1) of the Competition Act, 2002.’ A cease-and-desist order has also been passed against the company.
In its official statement, CCI said, 'MSIL (Maruti Suzuki India Limited) had a "Discount Control Policy" in place for its dealers whereby the dealers were discouraged from giving extra discounts, freebies, etc. to the consumers beyond what was permitted by MSIL. 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 the imposition of penalty, not only upon the dealership but also upon its individual persons, including Direct Sales Executive, Regional Manager, Showroom Manager, Team Leader, etc.'
Further, the commission revealed that Maruti Suzuki appointed ‘Mystery Shopping Agencies (MSAs)’ to pose as customers at the company’s dealerships to find out if additional discounts were being offered to customers. If that turned out to be the case, the MSA would present the company with audio/video proof of the same. After verifying it, Maruti Suzuki would then ask the 'errant’ dealership for clarification. If the clarification was not offered, a penalty would be imposed on the dealership and its employees. In some cases, Maruti Suzuki would also threaten the dealer of stopping supplies, says CCI.
CCI adds that Maruti Suzuki’s conduct resulted in an 'appreciable adverse effect on competition within India’. Not to mention, it also worked against consumers, who could have benefitted from higher discounts.
In response to the allegations, Maruti Suzuki said in a statement, 'We are examining the order and will take appropriate actions under the law. MSIL has always worked in the best interests of consumers and will continue to do so in the future.'