Maruti Suzuki India Ltd (MSIL) was fined Rs 200 crore by the Competition Commission of India (CCI) for prohibiting dealers from providing consumers discounts beyond those authorized by the business. The CCI has requested MSIL, the country’s largest vehicle manufacturer, to end its discount control policy, which threatens to penalize dealerships and individual employees who give additional discounts.
The director-general of the CCI conducted an inquiry into MSIL’s actions and discovered a series of emails. The firm ordered dealers to give only specified discounts and threatened dealers with penalties. In an email to dealers in 2013, MSIL-commercial NCR’s chief stated, “We would brutally launch Multiple Penal Action, if needed, to remove this problem at any cost.”
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According to emails, MSIL also slapped a Rs 1-lakh penalty on a Kerala dealership for discounts on a Rs 4,500 basic kit. Multiple emails from MSIL to dealers also detailed a rising schedule of penalties for breaking discount control regulations, with fines ranging from Rs 50,000 for the first offence to Rs 2 lakh for the third subsequent offences. In one email, MSIL further suggested that any direct sales executive who broke the discount policy twice should be “sacked” and “blacklisted” from the MSIL network. The inquiry also revealed email conversations in which dealers requested authorization to offer discounts over those prescribed by MSIL but were rejected.
“MSIL has always acted in the best interests of consumers and will continue to do so in the future,” a spokesman for the company stated. MSIL is one of 14 automakers penalized Rs 2,544 crore by the CCI in 2014 for failing to make replacement parts for their vehicles available on the open market. Honda Motorcycle and Scooter India have also been subjected to a similar inquiry by the CCI for limiting dealer discounts.
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The CCI denied MSIL’s claims that the firm functioned only as a third-party arbitrator for dealer agreements, which stated that the corporation instructed dealers to pay fines and how such monies would be utilized, such as for marketing. According to the CCI, the firm reportedly threatened to cease supplying specific dealers if offered extra discounts. “It reduced inter-brand and intra-brand competition, resulting in items not being supplied to customers at the best possible price,” the CCI stated in its order.
