Dgir Pulls Up Pal-Peugeot Over Interest Payment

This tantamounts to restrictive/unfair trade practice, says DGIR.

DGIR is filing an application against the company with the Monopolies and Restrictive Trade Practices Commission for initiating further enquiry into the case, besides issuing orders to cease and desist from these unfair and restrictive practices.

According to the DGIR's report, PAL-Peugeot has collected Rs 270 crore as booking money for its Peugeot 309 car to be produced in the next four years. As per the terms, the booking value for the car was Rs 25,000 per vehicle and the number of applications received by the company was approximately 1.08 lakh.

Clause 12 of the booking terms of Peugeot 309 states that interest would be payable at 9 per cent per annum compounded annually, but no interest will be paid if the cancellation request is received within 365 days from the date of closing of the booking.

 

According to the DGIR, the non-payment of any interest by PAL-Peugeot, even if the deposit is for about 12 months, is a restrictive trade practice under Section 2 (o)(ii) of the Monopolies and Restricitve Trade Practices Act.

This is because the customer booking the vehicle suffers loss of interest on the deposit amount blocked with the company and also on which the company made earnings.

The DGIR report further says that by paying less interest at 9 per cent per annum on the booking deposits, PAL-Peugeot has been earning good returns by investing such funds with the scheduled banks and saving huge amounts by way of non-payment of interest by using such deposits towards working capital.

This, say DGIR officials, tantamounts to adoption of unfair trade practice under Section 36A of the Act.

The DGIR's report also points out that clause 16 of the booking terms of PAL-Peugeot imposes high charges of Rs 2,000 in case of transfer of booking to any person, company or firm.

This tantamounts to manipulation of prices or conditions of delivery so as to impose unjustified costs to customers.

Also, the price list furnished by the company reflects net dealers price and maximum retail price, but this does not give freedom to the dealers to charge prices lower than the stipulated maximum prices.

The issuance of this price list, the DGIR states, involves restrictive trade practice under Section 33(1) of the Act.