Maruti Suzuki is the biggest and top selling car manufacturer in India. One may think that it’s dealers may be happy given the amount of sales and market share that the manufacturer has in the country. However, The Competition Commission of India has imposed a penalty of ₹200 crore on the automaker for restricting discounts by dealers. The automaker also employed mystery shopping agencies to ensure no additional discount was offered to customers by its dealerships, the watchdog found in its investigation.
Official statement
“The Competition Commission of India (CCI) passed a final order against Maruti Suzuki India Limited (MSIL) for indulging in anti-competitive conduct of Resale Price Maintenance (RPM) in the passenger vehicle segment by way of implementing Discount Control Policy vis-à-vis dealers, and accordingly, imposed a penalty of ₹200 crore upon MSIL,” Ministry of Corporate Affairs said in a statement on Monday. The CCI has asked Maruti Suzuki to “cease and desist” from anti-competitive practices related to dealer discounts and deposit the fine within 60 days. The CCI started investigating into the matter back in 2019 when the manufacturer was allegedly forcing 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.
“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,” the ministry stated. In another development, it was also found that the automaker would employ mystery shopping agencies (MSAs) to pose as customers to the company’s dealerships and find out if any additional discounts were being offered to customers. The MSA would then report to the management about the discounts with a proof and the company would then e-mail the dealership regarding the discounts. “If clarification was not offered by the dealership to the satisfaction of MSIL, penalty would be imposed on the dealership and its employees, accompanied in some cases, by the threat of stopping supplies. MSIL would even dictate to the dealership where the penalty had to be deposited and utilisation of the penalty amount was also done as per the diktats of MSIL,” the ministry statement read.