The Competition Commission of India (CCI) on Monday imposed a ₹200 crore penalty on Maruti Suzuki India Ltd, the country’s largest carmaker, for allegedly stifling competition with its policy of controlling the discounts dealers could offer consumers.
The competition watchdog also asked the Suzuki Motor Corp. unit to ‘cease and desist’ from its discount control policy, which amounts to an agreement between entities at different levels in a distribution channel over resale pricing, which is regarded as an anti-competitive practice under law.
CCI said it took a considerate view of the penalty being imposed, given the post-pandemic phase of recovery in the automobile sector, whereas the maximum penalty permissible under law extended up to 10% of the average of the turnover of the entity for the three preceding financial years.
The case stemmed from an anonymous complaint from an auto dealer who alleged in 2017 that Maruti’s sales policy was against the interest of customers and was against the provisions of Competition Act. It was alleged that the dealers of Maruti in some parts of Maharashtra were not allowed to give discounts to their customers beyond what was prescribed by Maruti. If a dealer is found giving extra discounts, a penalty is levied, the CCI order said, quoting from the complaint.
The regulator’s analysis found Maruti not only entered into an agreement with dealers for imposing its discount control policy, but also enforced it through fines, which resulted in appreciable adverse effect on competition, the CCI order said. “CCI…. directs Maruti Suzuki to deposit the penalty of ₹200 crore within 60 days of receipt of the order,” the order said.
{{/usCountry}}The regulator’s analysis found Maruti not only entered into an agreement with dealers for imposing its discount control policy, but also enforced it through fines, which resulted in appreciable adverse effect on competition, the CCI order said. “CCI…. directs Maruti Suzuki to deposit the penalty of ₹200 crore within 60 days of receipt of the order,” the order said.
{{/usCountry}}A spokesperson for Maruti said, “We are examining the order and will take appropriate actions under law. Maruti Suzuki has always worked in the best interests of consumers and will continue to do so.”
The ministry of corporate affairs said in a statement that in Maruti’s case, any dealer found violating its policy was threatened with penalties, which included individuals such as sales executives. Maruti even appointed agencies that posed as customers to check if dealers offered additional discounts, the statement said.
Malyaban Ghosh contributed to the story.