New Delhi: India Competition Commission (ICC) issues final order against Maruti Suzuki India Limited (MSIL) for engaging in “anti-competitive behavior” of resale price maintenance (RPM) in the vehicle segment tourism by implementing the Discount Control Policy vis-à-vis concessionaires. He imposed a penalty of Rs 200 crore in addition to passing a cease and desist order.
A statement from the Department of Commercial Affairs said CCI discovered that MSIL had an agreement with its resellers and that they were being prevented from offering discounts to customers beyond those prescribed by MSIL.
“MSIL had a ‘discount control policy’ in place for its resellers whereby resellers were discouraged from giving additional discounts, freebies, etc. to consumers beyond what was authorized by MSIL. If a dealership wished to offer additional discounts, prior approval from MSIL was required. Any dealer caught violating this discount control policy was threatened with the imposition of a sanction, not only on the dealership, but also on their people, including the director of direct sales, the regional director, the director of showroom and team leader, ”the statement said.
To enforce the discount control policy, MSIL appointed mystery shopping agencies (MSAs) that masqueraded as customers to MSIL dealerships to see if additional discounts were offered to customers.
If such discounts were offered, the MSA would notify MSIL management with proof (audio / video recording) which in turn would email the wandering dealer with a ‘mystery purchase audit report’. , confronting them about the discounts offered and asking for clarification.
“If clarification was not offered by the dealership to MSIL’s satisfaction, a penalty would be imposed on the dealership and its employees, accompanied in some cases by the threat of shutting down supplies,” the statement said.
MSIL would even dictate to the dealership where the penalty should be deposited and the use of the “penalty amount was also in accordance with MSIL’s dictates”.
“CCI found that MSIL not only imposed the discount control policy on its dealers, but also monitored and enforced it by monitoring dealers through MSAs, imposing sanctions on them and threatening them with strict measures such as as the cessation of supply, collection and recovery of penalties. Therefore, such conduct by MSIL, which had an appreciable adverse effect on competition in India, was found by CCI to be in violation of the provisions of Article 3 (4) (e) read together with Article 3 (1) of the Competition Law, 2002, ”the statement read. (ANI)