CCI imposes ₹200 crore penalty on Maruti Suzuki over dealer discount policy: Report
PremiumSubsequently, CCI has asked the automaker to ‘cease and desist' from anti-competitive practices related to dealer discounts
The Competition Commission of India has imposed a penalty of ₹200 crore on automaker Maruti Suzuki for restricting discounts by dealers.
“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 the automaker to “cease and desist" from anti-competitive practices related to dealer discounts and deposit the fine within 60 days.
In 2019, the competition watchdog started looking into allegations that Maruti Suzuki 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.
Subsequently, CCI found that Maruti had an agreement with its dealers whereby they were restrained from offering discounts to the customers beyond those prescribed by the company.
“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 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," it added.
Shares of Maruti Suzuki today trade 0.30% lower at ₹6,826.75 apiece on BSE.
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Meanwhile, the country's largest carmaker said its total production in July increased by 58 per cent on a yearly basis to 1,70,719 units.
The company had produced a total of 1,07,687 units in the year-ago period, Maruti Suzuki India (MSI) said in a regulatory filing.
"While the number of vehicles manufactured in July 2021 is higher than that of July 2020, a comparison is not meaningful because sales in July last year had a much lower base due to pandemic related disruptions," the auto major noted.
The number of vehicles manufactured in July this year remained on the lower side as compared to July 2018, it added.
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