CCI Imposes Rs 200-Crore Penalty on Maruti Suzuki Over Discount Control Policy

The dealers were informed by MSIL that no discount above the ones stated is to be offered to consumers.

Fine imposed on Maruti Suziki India Ltd over anti-competitive practice of dealer discount policy.

(File Photo: PTI)

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.

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 Competition 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 percent of the average of the turnover of the entity for the last three preceding financial years (sic)," 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 MSIL that no discount above the stated ones is 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.