CCI imposes ₹200 crore penalty on Maruti for restricting discounts by dealers

The Competition Commission of India found out that Maruti Suzuki India Limited appointed mystery shopping agencies who used to pose as customers to find out if any additional discounts were being offered.

The Competition Commission of India (CCI) on Monday imposed a penalty of ₹200 crore on Maruti Suzuki India Limited (MSIL) for indulging in anti-competitive conduct. In a release, the ministry of corporate affairs said that MSIL implemented a discount control policy in passenger vehicle segment through Resale Price Maintenance.

Maruti prevented its dealers from offering additional discounts to customers.

"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. In other words, 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 were permitted by MSIL," the ministry said in the release.

"Any dealer found violating such Discount Control Policy was threatened with 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," it added.

The CCI probe also found out that MSIL appointed mystery shopping agencies who used to pose as customers to find out if any additional discounts were being offered. "If found offered, the agencies would report to MSIL management with proof (audio/ video recording) who, in turn, would send an e-mail to the errant dealership with a ‘Mystery Shopping Audit Report’, confronting them with the additional discount offered and asking for clarification."

The company was found in contravention of the provisions of Section 3(4)(e) read with Section 3(1) of the Competition Act, 2002.

The CCI has asked the automaker to "cease and desist" from anti-competitive practices related to dealer discounts and deposit the fine within 60 days.

The Competition Commission of India keeps a tab on unfair business practices across sectors.