Companies

NCLAT stays ₹200 crore penalty imposed by CCI on Maruti Suzuki

Our Bureau | | Updated on: Nov 23, 2021
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Earlier in August, the CCI had imposed a penalty on MSIL for allegedly stifling competition with its policy of controlling the dealer's discounts.

National Company Law Appellate Tribunal (NCLAT) has stayed the ₹ 200 crore penalty imposed by the Competition Commission of India (CCI) on the country’s largest car manufacturer Maruti Suzuki.

It, however, directed Maruti Suzuki to deposit 10 per cent of the total penalty amount with the NCLAT's Registrar within three weeks.

The NCLAT will take up the appeal filed by Maruti Suzuki for admission on December 15.

The CCI issued demand notice of October 27 was stayed on Monday by a three-member NCLAT bench.

Read also: CCI slaps ₹200-crore penalty on Maruti for restricting discounts by dealers

Alleged anti-competitive conduct

It may be recalled that CCI had on August 23 imposed a penalty of ₹200 crore on MSIL for allegedly stifling competition with its policy of controlling the discounts dealers could offer customers.

CCI had found MSIL indulging in anti-competitive conduct of Resale Price Maintenance (RPM) in the passenger vehicle segment by implementing a discount control policy vis-a-vis dealers.

Also read: Is discount control by auto firms justifiable?

MSIL had an agreement with its dealers whereby the dealers were restrained from offering discounts to the customers beyond those prescribed by it. In other words, the company had a discount control policy, and dealers who wanted to provide additional discounts were required to compulsorily seek Maruti Suzuki's prior approval.

Any dealer found violating such Discount Control Policy was threatened with the imposition of penalty, not only upon the dealership but also upon its individual persons, including Direct Sales Executive, Regional Manager, Showroom Manager, Team Leader etc.

To enforce the Discount Control Policy, Maruti Suzuki had appointed 'Mystery Shopping Agencies (MSAs) who used to pose as customers to Maruti Suzuki dealerships to find out if any additional discounts were being offered to customers.

Published on November 23, 2021

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