CCI imposes Rs 200 cr penalty on Maruti Suzuki over dealer discount policy

CCI has asked Maruti to 'cease and desist' from indulging in such practices and asked the company to deposit the fine within 60 days

India's antitrust regulator has fined Maruti Suzuki India Limited (MSIL), the country's biggest carmaker, Rs 200 crore for anti-competitive practices related to how it forced dealers to discount cars, the watchdog said in an order on Monday.

The Competition Commission of India (CCI) in 2019 started looking into allegations that Maruti 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.

In an order issued after an investigation, the CCI asked Maruti to "cease and desist" from indulging in such practices and asked the company to deposit the fine within 60 days.

The fine has been slapped for "indulging in anti-competitive conduct of Resale Price Maintenance (RPM) in the passenger vehicle segment by way of implementing Discount Control Policy vis--vis dealers," the regulator said in a release on Monday.

CCI found that MSIL had an agreement with its dealers whereby the dealers were restrained from offering discounts to the customers beyond those prescribed by MSIL.

"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. Any dealer found violating such Discount Control Policy was threatened with imposition of penalty, not only upon the dealership, but also upon its individual persons, including Direct Sales Executive, Regional Manager, Showroom Manager, Team Leader, etc," said CCI in a statement.

Maruti, majority-owned by Japan's Suzuki Motor Corp, did not immediately respond to a request for comment.

In June, Maruti Suzuki has announced a price hike for its entire lineup to come into effect in the third quarter of 2021 (July-September).

The carmaker has quoted the increase in various input costs over the past year, as the reason for the price hike. This is Maruti’s third price hike experienced in 2021, following the hikes in January where it was increased by upto Rs 34,000, and by one to six percent in April.