New Delhi: The Indian Competition Commission (ICC) on Monday fined Maruti Suzuki 200 crore rupees for restricting discounts offered by its dealers and ordered the country’s largest automaker to cease and desist from operating. engaging in unfair trading practices.
In passing an order, the fair trade regulator also reported practices such as the appointment of mystery shopping agencies and the preparation of mystery audit reports as part of the application of the discount control policy of the company.
The watchdog imposed a fine of Rs 200 crore because it found that Maruti Suzuki India Ltd (MSIL) had engaged in anti-competitive resale price maintenance (RPM) behavior in the passenger vehicle segment in implementing a policy of controlling discounts vis-à-vis dealers, an official statement announced on Monday.
MSIL had an agreement with its resellers whereby resellers were prevented from offering customers discounts beyond those prescribed by it. In other words, the company had a policy of controlling discounts and dealers who wished to offer additional discounts were required to seek prior approval from the company, in accordance with the regulator.
According to the ICC, any dealer found in violation of the policy was threatened with the imposition of a sanction, not only on the dealership but also on its people, including the director of direct sales, the regional director and the director of the showroom.
To enforce the discount control policy, the watchdog said the company had appointed “mystery shopping agencies” (MSAs) that masqueraded as customers at MSIL dealerships to see if additional discounts were offered. to customers.
“If proposed, the MSA would report to MSIL management with proof (audio / video recording) which in turn would email the wandering dealership with a” Mystery Purchase Audit Report “, Confronting them with the additional discount offered and asking for clarification,” the statement said.
Read also | 7 strategies to grow your brand’s presence on LinkedIn organically
In addition, the ICC noted that if the clarification offered by the concessionaire concerned was not satisfactory, then a sanction would be imposed on the concessionaire and its employees, accompanied in some cases by the threat of stopping supplies.
“MSIL would even dictate to the dealership where the penalty should be deposited and the use of the penalty amount was also in accordance with MSIL’s dictates,” the statement said.
The ICC found that the automaker not only imposed the discount control policy on its dealers, but also monitored and enforced the same by monitoring dealerships through MSAs, imposing sanctions on them and threatening them. strict measures such as stopping the supply, collecting and recovering penalties and the use of the same.
Such activities have had a significant negative effect on competition in India, he noted.