The Big Blow - 200 crores penalty to Maruti Suzuki

A bold decision was given by the Competition Commission of India (CCI) on the giant car manufacturing company - Maruti Suzuki India Limited. I thought of giving a taste changer.

The Competition Commission of India has imposed a penalty of Rs. 200 crores on the giant car manufacturing company Maruti Suzuki India Limited (MSIL) because it was restricting its dealers who wanted to give discounts to the customers to boost their sales. Along with it, the manufacturer also employed mystery shopping agencies (fake customers) to ensure that the dealers were following the terms of sale as laid down by the company.

The company laid down Discount Control Policy on its dealers handcuffing them from giving any additional discounts or schemes to its customers other than offered by the company. This is an anti-competitive practice involving the conduct of Resale Price Maintenance (RPM).

The CCI has hence asked to deposit the above penalized sum within a period of 60 days. It started watching the company right from 2019 where there were allegations that the company is forcing its dealers to limit the discounts, they offer. These dealers could have benefitted their businesses, had they been allowed to operate freely. If a dealer wanted to give additional discounts, prior permission from MSIL was mandatory which made obvious that the dealers were prohibited from giving freebies or extra discounts.

There was also news that MSIL had appointed an agency which acted as fake customers who used to visit dealers to understand that whether they are following the terms and conditions as laid down by the company and whether are they abiding the words of the company in respect to discounts and further offers to the customers.

If such was the case, the dealers were liable to penalty and since the agencies would provide proof in the form of ‘Mystery Shopping Audit Report’ to the company, there was no escape route.

These led to anti-competitive practices which led to adverse effect on the healthy competition in India and hence CCI penalized the company to refrain from such practices giving a solid example so that other companies who followed such practices would stop it with immediate effect.

Disclaimer: This is just a basic idea of the statement. However, complete facts must be read before coming to any conclusion. 

You can also follow me on Instagram and Facebook for more updates.

Thank you for reading!!