The Competition Commission of India (CCI) on August 23 imposed a fine of Rs 200 crore on the country’s biggest carmaker Maruti Suzuki India Limited (MSIL) for indulging in unfair business practices.
The regulator found India’s largest carmaker guilty of resale price maintenance in the passenger vehicle segment.
Reason
MSIL 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.
Beginning of a probe
The CCI had said in a 10-page report released earlier that the matter arose after an e-mail was sent by a purported dealer anonymously against MSIL, alleging resale price maintenance resorted to by the carmaker in certain areas.
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.
Statment read as,
“The Competition Commission of India passed a final order against Maruti Suzuki India Limited (MSIL) for indulging in anti-competitive conduct of Resale Price Maintenance (RPM) in the passenger vehicle segment by way of implementing Discount Control Policy vis-à-vis dealers, and accordingly, imposed a penalty of Rs 200 crore upon MSIL, besides passing a cease-and-desist order.”
“CCI found that MSIL had an agreement with its dealers whereby the dealers were restrained from offering discounts to the customers beyond those prescribed by MSIL.”
Comment from Company
A company spokesperson said, “We 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.”
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