Discount curbs: Maruti fined Rs 200 crore by CCI – Times of India
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NEW DELHI: Fair play watchdog Competition Commission of India (CCI) has imposed a Rs 200-crore penalty on top car maker Maruti Suzuki for centrally controlling and restricting dealer discounts, saying the practice led to “denial of benefits” to buyers, while lowering competitive fightback in auto industry.
CCI, which had taken up the case on a suo motu basis in November 2017 after receiving an anonymous complaint by a purported Maruti dealer, said the company should “cease and desist” from indulging in the unfair business practices, while depositing the penalty within 60 days. Maruti Suzuki said it is examining the order and will take appropriate actions under law. “Maruti has always worked in the best interests of consumers and will continue to do so in the future,” a company statement said.
The matter was initially investigated by the directorgeneral of investigations within the CCI, which had raised objections to the practice. “Such a practice of resale price maintenance (RPM) by Maruti Suzuki caused an appreciable adverse effect on competition within India. It lowered inter-brand and intra-brand competition and led to products not being offered to the consumers at best prices. International cases also demonstrate that such acts cause appreciable adverse effect on competition.”
CCI said Maruti had agreements whereby dealers were restrained from offering additional discounts to customers beyond those prescribed by the company. In other words, the company had a discount control policy and dealers who wanted to offer additional discounts were required to compulsorily seek the company’s prior approval.
CCI, which had taken up the case on a suo motu basis in November 2017 after receiving an anonymous complaint by a purported Maruti dealer, said the company should “cease and desist” from indulging in the unfair business practices, while depositing the penalty within 60 days. Maruti Suzuki said it is examining the order and will take appropriate actions under law. “Maruti has always worked in the best interests of consumers and will continue to do so in the future,” a company statement said.
The matter was initially investigated by the directorgeneral of investigations within the CCI, which had raised objections to the practice. “Such a practice of resale price maintenance (RPM) by Maruti Suzuki caused an appreciable adverse effect on competition within India. It lowered inter-brand and intra-brand competition and led to products not being offered to the consumers at best prices. International cases also demonstrate that such acts cause appreciable adverse effect on competition.”
CCI said Maruti had agreements whereby dealers were restrained from offering additional discounts to customers beyond those prescribed by the company. In other words, the company had a discount control policy and dealers who wanted to offer additional discounts were required to compulsorily seek the company’s prior approval.
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