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

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. The Competition Commission of India (CCI) in 2019 started looking into allegations that Maruti forces its dealers to limit the discounts they offer, effectively stifling competition among them and harming consumers who could have benefited from lower prices if dealers operated freely, Reuters had reported. In an order issued after an investigation, the CCI asked Maruti to "cease and desist" from indulging in such practices and asked the company to deposit the fine within 60 days.

The fine has been slapped for "indulging in anti-competitive conduct of Resale Price Maintenance (RPM) in the passenger vehicle segment by way of implementing Discount Control Policy vis--vis dealers," the regulator said in a release on Monday. 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. If a dealer wanted to offer additional discounts, prior approval of MSIL was mandatory. 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," said CCI in a statement. In June, Maruti Suzuki has announced a price hike for its entire lineup to come into effect in the third quarter of 2021 (July-September).