The CCI, Competition Commission of India, has imposed a penalty on Maruti Suzuki of Rs 200 crores for restricting discount dealers.
The largest automaker company in India has been penalized on the grounds of indulging in anticompetitive conduct.
As per the investigation, Maruti Suzuki implemented a discount control policy in the passenger vehicle segment.
Statements
The ministry said that the Competition Commission of India had imposed a penalty on Maruti Suzuki India Limited (MSIL) of Rs 200 crores for their indulgence in anticompetitive conduct for Resale Price Maintenance (RPM) in the passenger vehicle segment by the discount policy.
He said that in other words, Maruti Suzuki had placed a ‘Discount control policy’ for the dealers, where the dealers were restrained from offering discounts to the customers beyond what the company permitted them.
If a dealer wanted to provide an additional discount, the company’s permission would be necessary to do so.
Any employee or dealer found overstepping the discount control policy and not clarifying their actions to satisfy the company were penalized for their dealership and individuals like the regional manager, sales executive, branch manager, etc.
The utilization of the penalty amount was done as per the ‘diktats’ of Maruti Suzuki.
In 2019, the CCI started investigating allegations that Maruti Suzuki forces its dealers to limit offering discounts which effectively started a competition among the dealers and sales executives.
This competition harmed customers as they were cut short of additional discounts, which could benefit them.
The CCI found out that Maruti Suzuki had an agreement with its dealers on the discount control policy, where the dealers were restricted to give additional discounts to the customer.
The company would set a limitation for discounts offered, and if the restriction is crossed, the dealer or the individual will be imposed a penalty.
In addition to this, the company created a Mystery Shopping Agency (MSA) to come as customers to the company’s dealership, checking whether additional discounts are being offered or not.
If they spot any additional discount, the MSA would report to the management of Maruti Suzuki with audio or video as proof.
The management would then email the respective dealer a ‘Mystery Shopping Audit Report’ confronting the dealers about the additional discount offered.
The company said they saw a rise in production in July of 58 per cent every year to 1,70,719 units.
The company produced a total of 1,07,687 units in the year-ago period.
While the number of units produced in the year 2021 is higher than the year 2020, a comparison would be null because the sales in 2020 dropped due to the pandemic disruptions.
