Maruti Suzuki fined Rs.200 Crore Over Dealer Discount Policy
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Maruti Suzuki fined Rs.200 Crore Over Dealer Discount Policy

Team CARS24
editor

The leading auto-manufacturer in India, Maruti Suzuki, has been fined by the Competition Commission of India (CCI). The brand has been fined a whopping 200-crore for controlling and restricting dealer discounts. The brand has been accused that this practice has been leading to “denial of benefits” to buyers and furthermore lowering the competitive fightback in the auto industry.  The CCI had taken up the case in the month of November in 2017, and it was picked up on a suo motu basis. Suo motu refers to an action taken by a court of its own accord, without any request by the parties involved. A very common phenomenon, as since January 2020, the Court has taken up 13 cases ‘suo moto’. This means they take up cases by their own notice, without any petition being filed or interest being brought before them. 

The complaint was filed against the auto-maker by a purported Maruti Suzuki dealer. The complaint was filed anonymously, which said that the brand should “cease and desist” from involvement in such unfair means in the business and also deposit the penalty within 60 days itself. 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.

The largest auto-maker of our country said that the order is under examination and the company will be taking the most appropriate actions under the law. The company also released a statement which said, 

Maruti has always worked in the best interests of consumers and will continue to do so in the future.” 

The complaint was first put into observation under the director general of investigations at the CCI. On investigating, some objections were raised to the practice. The CCI stated that, 

Such a practice of resale price maintenance (RPM) by Maruti Suzuki caused an appreciable adverse effect on competition within India. It lowered interbrand and intrabrand competition and led to products not being offered to the consumers at the best prices. International cases also demonstrate that such acts cause appreciable adverse effects on competition.

The CCI has made clear that Maruti had agreements where the dealers refrained from providing additional discounts to the customers beyond the ones that were prescribed by the company. The company had a discount control policy. The dealers who were willing to offer additional discounts to the consumers had to seek mandatory approval from the company.

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