CCI imposes BIG penalty on Maruti Suzuki - Here's why

The Competition Commission of India (CCI) found Maruti Suzuki’s dealer discount control policy anti-competitive and has asked the company to pay the fine without 60 days of receiving the order.

As per the antitrust watchdog, the carmaker has allegedly displayed anti-competitive conduct in its policy to control the discounts that its dealers can offer to customers.

As per the CCI statement, Maruti Suzuki India Limited (MSIL) dealers enter agreements that restrain them from any additional discounts to buyers over the company prescribed amount. The agreement allegedly performed as a deterrent that kept dealers from offering additional discounts, offers or freebies to lure consumers beyond what MSIL approved.

Maruti Suzuki has been asked by the CCI to cease and desist from the dealer discount control policy.

The carmaker’s discount policy reportedly came to CCI’s notice after an anonymous complain in 2017 by an MSIL dealer.

As per CCI, dealers found giving discounts beyond the prescribed limit were penalized as per the discount control policy. The penalty was allegedly enforced not just on the dealership but also individuals working in it like Direct Sales Executive, Regional Manager, Showroom Manager, Team Leader etc.

Another eye-opening revelation as per the CCI is that MSIL employed Mystery Shopping Agencies (MSAs) which enforced and monitor this dealer discount control policy. Posing as potential buyers, these MSAs would find out whether a dealer was giving more discounts that prescribed.

As per CCI, “…such conduct of MSIL which resulted in an appreciable adverse effect on competition within India.”

A company spokesperson reportedly responded to the penalty by CCI saying that MSIL had seen the order and was examining it before taking appropriate actions under law. The Maruti Suzuki spokesperson added, “MSIL has always worked in the best interests of consumers and will continue to do so in the future.”