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CCI imposes Rs 200 crore penalty on Maruti

  • IASbaba
  • August 24, 2021
  • 0
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CCI imposes Rs 200 crore penalty on Maruti

Part of: GS Prelims and Mains GS-III- Economy

In news: The Competition Commission of India (CCI) passed a final order against Maruti Suzuki India Limited (MSIL) for indulging in anti-competitive conduct by way of implementing Discount Control Policy vis-à-vis dealers.

  • CCI has accordingly, imposed a penalty of ₹200 crore (Rupees Two Hundred Crore Only) upon MSIL, besides passing a cease-and-desist order.

What did Maruti Suzuki do?

  • MSIL had a ‘Discount Control Policy’ in place for its dealers whereby the dealers were discouraged from giving extra discounts freebies, etc. to the consumers beyond what were permitted by MSIL. 
  • Any dealer found violating such Discount Control Policy was threatened with 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, MSIL appointed Mystery Shopping Agencies (‘MSAs’) who used to pose as customers to MSIL dealerships to find out if any additional discounts were being offered to customers. 
  • MSIL would even dictate to the dealership where the penalty had to be deposited and utilisation of the penalty amount was also done as per the diktats of MSIL.
  • Such conduct of MSIL which resulted in appreciable adverse effect on competition within India, was found by CCI to be in contravention of the provisions of Section 3(4)(e) read with Section 3(1) of the Competition Act, 2002.

Competition Commission of India (CCI) 

  • It is a statutory body of the Government of India. 
  • It is responsible for enforcing The Competition Act, 2002 throughout India.
  • It prevents activities that have an appreciable adverse effect on competition in India. 
  • It was established on 14 October 2003 and became fully functional in May 2009. 
  • CCI consists of a Chairperson and 6 Members appointed by the Central Government. 
  • It is the duty of the Commission to:
    • eliminate practices having adverse effect on competition, 
    • promote and sustain competition,
    • protect the interests of consumers, 
    • ensure freedom of trade in the markets of India. 

News Source: PIB

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