The biggest carmaker of India, Maruti Suzuki India Ltd., is in big trouble! A fine of Rs. 200 crores has been slapped on MSIL for not allowing dealers to offer discounts to their customers other than those the company has prescribed.
MSIL has also been asked to cease its discount control policy. Apparently, under this policy, dealerships and individual employees giving extra discounts are penalized.
Maruti Suzuki Fined Rs. 200 Crores For Offering Discounts?
As per The Competition Commission of India (CCI), MSIL has agreed with its dealers throughout the country about imposing a discount control policy amounting to RPM (Resale Price Maintenance). Not only this, but the company is also monitoring it by appointing Mystery Shopping Agencies (MSAs) and enforcing imposition of penalties.
The order by the CCI has also revealed that MSIL has hired MSAs that conduct mystery shopping audits and fined the dealerships and employees who offered additional discounts.
It also includes an example where MSIL imposed a fine of Rs. 5000 on a direct sales executive and Rs. 50000 on the dealership for giving a discount of Rs. 1850 on accessories. There also has been a case where the dealership was fined Rs. 2,00,000 for a repeat incidence of offering extra cash discounts.
As per the order by the CCI, “Such a practice of RPM by MSIL caused an appreciable adverse effect on competition within India. It lowered inter-brand and intra-brand competition and led to products not being offered to the consumers at best prices.”
Threatening Emails By MSIL Commercial Head Found
The CCI has found emails during the investigation which revealed that the company had directed dealers to offer discounts that the company has prescribed. What’s even more shocking is that the dealers have been threatened by the company as well.
An email by the commercial head of MSIL-NCR states, “It has come to my notice that some dealers are trying to do some violation of market discipline norms … as the month-end is approaching. Let me inform you that we will mercilessly initiate Multiple Penal Action, if required, to stop this menace at any cost.”
MSIL has also said in an email that if any direct sales executive is found guilty of violating the discount policy two times, they will be “sacked” and “blacklisted” from the MSIL network.