The Competition Commission of India (CCI) has fined Rs 200 crores on India’s largest carmaker, Maruti Suzuki, for anti-competitive practices regarding preventing dealers from offering discounts to buyers beyond designated limits set by the OEM. CCI has given Maruti Suzuki India Limited (MSIL) 60 days to pay the fine.
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These allegations had first surfaced in 2019 when the CCI started investigating Maruti Suzuki. It was reported that Maruti Suzuki was forcing its dealers to restrict discounts offered to customers within the prescribed limits set by the carmaker. In simple words, MSIL had a ‘Discount Control Policy’ in place for its dealers whereby the dealers were restrained from giving extra discounts, freebies, etc. to the consumers beyond what was permitted by the company. And if a dealer wanted to offer additional discounts, prior approval of MSIL was mandatory. In fact, they have also threatened their dealerships who violated the policy with stoppage of supply and imposition of penalties not only upon the dealership but also upon its individual persons, including Direct Sales Executive, Regional Manager, Showroom Manager, Team Leader, etc.
During the investigation, Maruti Suzuki officials denied imposing any "discount control policy" on the dealers and said they are free to pass any discount to their customers. However, the CCI order contained extracts of several emails exchanged between dealers and Maruti officials, which made it clear that the Discount Control Policy was controlled by Maruti and not its dealers.
Maruti has stated that – “We have seen the order dated 23 August 2021 published by the Competition Commission of India. We are examining the order and will take appropriate actions under the law. MSIL has always worked in the best interests of consumers and will continue to do so in the future.”
These types of practices actually stifled competition among dealerships and harmed consumers who could have benefited from lower prices if dealers were allowed to operate independently. Such acts are in contravention of the provisions of Section 3(4)(e) read with Section 3(1) of the Competition Act, 2002.
