Competition Commission of India
In Re: Alleged Anti-Competitive ... vs Unknown on 23 August, 2021
COMPETITION COMMISSION OF INDIA
Suo Motu Case No. 01 of 2019
In Re: Alleged anti-competitive conduct by Maruti Suzuki India Limited in
implementing discount control policy vis-à-vis dealers
CORAM
Ashok Kumar Gupta
Chairperson
Sangeeta Verma
Member
Bhagwant Singh Bishnoi
Member
Present:
Dr. Abhishek Manu Singhvi and Mr. Rajshekhar Rao, Senior Advocates,
For Maruti
with Ms. Shweta Shroff Chopra, Mr. Rohan Arora and Ms. Supritha
Suzuki India
Prodaturi, Authorized Representatives of MSIL and Ms. Manjaree
Limited (MSIL):
Chowdhary, Executive Director and General Counsel of MSIL
ORDER UNDER SECTION 27 OF THE COMPETITION ACT, 2002
Facts:
1. The present matter was taken up suo motu by the Commission based on an anonymous e-
mail dated 17.11.2017 received from a purported Maruti Suzuki India Limited ('MSIL')
dealer, wherein it was, inter alia, alleged that MSIL's sales policy is against the interest
of customers as well as the provisions of the Competition Act, 2002 (the 'Act'). It was
alleged that the dealers of MSIL in the West-2 Region (Maharashtra State other than
Mumbai & Goa) are not permitted to give discounts to their customers beyond that
prescribed by MSIL in the announced 'consumer offer'. If a dealer is found giving extra
discounts, a penalty is levied upon the dealer by MSIL. This is called the 'Discount
Control Policy' of MSIL. It was averred that, as such, a cartel is formed by MSIL within
the dealerships, which is a policy of MSIL.
Suo Motu Case No. 01 of 2019 1
2. It was alleged that if a dealer of MSIL was found to be giving discounts other than those
permitted by MSIL, MSIL would send the dealer an e-mail imposing a penalty,
depending on the number of incidents found against that dealer in a particular financial
year ('FY'). In the e-mail, the reason for the imposition of penalty would not be
mentioned as this would be in violation of the provisions of Competition Law. Copies of
several such e-mails were annexed with the complaint e-mail, after redacting the names
of sender/recipient therefrom. In comparison, it was also shown that, where penalties
were imposed for violation of any other policy of MSIL (except Discount Control
Policy), like manpower encroachment, selling outside territory, charging extra from
customer, etc., the reason for imposition of penalty would be mentioned in the e-mail
sent imposing the penalty.
3. It was stated that the penalty amount imposed was required to be paid via a cheque in the
name of one Ms. Swati Kale, wife of Mr. Vinod Kale, who was the Vice-President of
Wonder Cars Pvt. Ltd., an MSIL dealership in Pune, Maharashtra. It was informed that,
prior to charging such a penalty, MSIL management would send an e-mail with a
'Mystery Shopping Audit Report' to the errant dealership asking for clarification.
MSIL's independent agency conducted a Mystery Shopping Audit by posing as a
customer to dealerships, checking whether extra discount is being offered. If found
offered, the agency would send audio proof of the offer to MSIL management who, in
turn, would send a 'Mystery Shopping Audit Report' via e-mail to the errant dealership
asking for clarification. If a clarification is not provided to the satisfaction of MSIL, a
penalty would be levied, not only on the dealership, but also on the Sales Executive and
the Team Leader making the sale, and copy of the said penalty e-mail would be marked
to all dealerships.
4. It was also stated that a similar Discount Control Policy was implemented by MSIL all
across India -- specifically in cities where more than 4 to 5 dealerships operated.
5. Upon consideration of the aforesaid e-mail dated 17.11.2017, the Commission issued a
notice to MSIL and gave it an opportunity to file its comments, if any, to the e-mail
received against it. Thereafter, the Commission held a preliminary conference with
MSIL on 22.05.2019 and decided to pass an appropriate order in the matter.
Suo Motu Case No. 01 of 2019 2
6. Upon consideration of the complaint received against MSIL and MSIL's response and
submissions thereto, the Commission, vide order dated 04.07.2019 passed under Section
26(1) of the Act, formed an opinion that there exists a prima facie case of contravention
of the provisions of Section 3(4)(e) of the Act, i.e., Resale Price Maintenance, by MSIL.
The Commission, hence, directed the Director General ('DG') to cause an investigation
into the matter and submit a report.
Investigation by the DG:
7. The DG submitted its investigation report. The DG first analysed the market structure
and observed that MSIL is operating in the upstream market of the manufacture of
passenger vehicles and has dealerships and distributorships operating in the downstream
market of distribution and sale of passenger vehicles, across India. In the upstream
market, i.e., the passenger vehicles segment (which comprises passenger cars, utility
vehicles and vans), MSIL had the highest market share in FY 2018-19, i.e., 51.22%, the
second largest being 16.14% of Hyundai Motor India Ltd. Further, the DG found that
MSIL's market share had shown a consistently growing trend from 2011-12 onwards.
8. The DG framed three issues and concluded each of them as follows:
8.1 As MSIL as well as its dealers are an 'enterprise' within the meaning of Section
2(h) of the Act, and MSIL is the manufacturer dealing in the upstream market
while dealers are the distributors dealing in the downstream market, an agreement
between MSIL and its dealers entered on a principal-to-principal basis can be
examined in terms of Section 3(4) of the Act, being an agreement amongst
enterprises engaged at different stages or levels of production chain in different
markets.
8.2 Based on the analysis of a large number of e-mails exchanged between MSIL and
its dealers from August 2012 to July 2019, it is evident that MSIL framed
guidelines and gave instructions to its dealers to not offer discounts without its
permission over certain pre-restricted levels. Further, MSIL appointed Mystery
Shopping Agencies ('MSA') to keep a track of the discounts offered by the dealers
and threatened to impose/imposed penalties on them and/or even threatened to
Suo Motu Case No. 01 of 2019 3
suspend supply of premium models to them for violation of such Discount Control
Policy. Upon reading the e-mails unearthed during the investigation, MSIL's
submission that MSAs were appointed by the dealers themselves and MSIL's role
was limited to being an independent third-party, was not found to be acceptable.
MSIL was, in fact, actively involved in the planning and implementation of such
Discount Control Policy as it even tracked the penalty imposed on a particular
dealer for violation and recovery thereof as well as utilisation of the penalty
amounts was also done as per the instructions of MSIL. Therefore, it is clear that
MSIL indulged in the practice of RPM through the implementation of its Discount
Control Policy on its dealers across India.
8.3 Such a practice of RPM by MSIL caused an appreciable adverse effect on
competition ('AAEC') within India. It lowered inter-brand and intra-brand
competition and led to products not being offered to the consumers at best prices.
International cases also demonstrate that such acts cause AAEC. Thus, such a
practice by MSIL is in contravention of Section 3(4)(e) of the Act.
Proceedings before the Commission:
9. The Commission considered the investigation report submitted by the DG, and vide its
order dated 12.01.2021, forwarded an electronic copy of the non-confidential qua OP
version of the same to MSIL, seeking its objections/suggestions, if any, thereto. The
Commission directed MSIL to furnish its audited balance sheets and profit and loss
accounts/turnover details for FYs 2017-18, 2018-19 and 2019-20 along with details of
the revenue and profits generated by it from the sale of 'passenger vehicles in India'
during these FYs by way of Affidavits supported by certificates from Chartered
Accountants.
10. Thereafter, the Commission held final hearing on the DG Report on 15.04.2021 through
video conferencing and decided to pass an appropriate order in the matter.
Suo Motu Case No. 01 of 2019 4
Submissions of MSIL:
11. In its objections/suggestions to the DG Report, and during the oral hearing, MSIL made,
inter alia, the following submissions:
11.1 There is no Discount Control Policy placed in effect by MSIL. The dealers, in
terms of Clause 28.1 of the Dealership Agreement entered into between MSIL and
the dealers, are free to offer any discounts they please to their customers.
However, since such varying discounts, even though do not impact MSIL, hurt the
dealers inter-se, the dealers, through an agreement among themselves, in some
regions have tried to police themselves. MSIL has no role to play in the same.
11.2 Dealers of MSIL are free to offer any discounts to consumers. Depending on the
purchase value of the vehicle, the dealers almost invariably offer a series of
freebies, such as:
(a) direct cash discount, which is officially conveyed by almost every dealer;
(b) additional unofficial discount, which most dealers' representatives promise
during the sale of the vehicle; and
(c) additional freebies, which are nothing but discounts in the form of extra free
services; pickup and delivery from home; numerous extra accessories;
extension of the regular warranty period; bear part or whole of the insurance,
etc.
11.3 By its very nature, the bewildering diversity, degree and nature of these free
offers/discounts cannot be regulated or controlled by MSIL or even by dealers
policing themselves, as there are 331 parent dealers (for all MSIL models put
together) and 3067 outlets across India.
11.4 The DG has failed to notice that at least 29% of all MSIL sales made in FY 2016-
17, 32% of all MSIL sales made in FY 2018-19, 30% of all MSIL sales made in
FY 2018-19 and 36% of all MSIL sales made in FY 2019-20, involved additional
discounts by dealers to consumers. These figures have been officially provided by
the dealers to MSIL. In other words, at least 22-36% of all sales involved
Suo Motu Case No. 01 of 2019 5
discounts that were definitely given and officially admitted by the dealer to MSIL
over and above the declared Consumer Offers. Furthermore, several other forms of
discounts, other than direct cash discounts, are not included in the said figures.
Hence, even where the Discount Control Policy was deployed by the dealers inter-
se (and not by MSIL), this was in an extremely limited set of instances and areas,
and it was not implemented as such, since in nearly 22-36% of the cases, dealers
gave substantially higher discounts without any penal action being taken against
them.
11.5 In order to impute any liability and to hold MSIL complicit to any alleged discount
control conduct, there has to be an agreement between MSIL and the dealers to
limit discounts. Though such an agreement has been alleged, no such agreement
has been produced by the DG, even with a single dealer, except relying on
oral/verbal allegations. The only agreement that MSIL has with is its dealers is the
Dealership Agreement on a principal-to-principal basis, which specifically allows
dealers to offer lower prices (Clause 28.1). MSIL's powers to levy penalties under
the Dealership Agreement are restricted (Clause 52 and Clause 60.2), and MSIL
has no power to penalise for additional discounts. There is no clause in the
Dealership Agreement that allows MSIL to levy a penalty on dealers for providing
discounts higher than those prescribed in the Consumer Offers to customers.
11.6 Mystery Shopping Audit is conducted by MSIL where anonymous inspectors
posing as customers check adherence to MSIL guidelines (Sales Operating
Procedures ('SOP') and System and Process Guides ('SPG')) to check the
courtesy, service, efficiency, etc. of each dealer. However, this type of Mystery
Shopping Audit does not pertain to the issue of discounts given by dealers. Non-
mystery official shopping audits are also conducted by MSIL where MSIL sends
its representatives to check the service and efficiency at various dealer outlets.
However, this is not pertinent to the present matter, because this does not bear any
relation to the alleged Discount Control Policy. On the contrary, these are
standardised protocols followed by MSIL to ensure proper functioning of dealer
outlets and uphold the brand value of MSIL.
Suo Motu Case No. 01 of 2019 6
11.7 Mystery Shopping Audit at certain places is conducted by the dealers amongst
themselves to check and prevent the giving of additional or unfair discounts.
However, MSIL is not a part of such agreements and only acts as an independent
third-party in relation to such agreements among dealers. Its role is limited to that
of an adjudicator. If culpability is found in the mystery shopping report qua any
particular dealer by other dealers, for example Dealer X, then the report is shared
with MSIL. MSIL, in turn, merely in the interest of natural justice and fair play,
sends the report to Dealer X and seeks its comments thereon. Finally, it
communicates the penalty to Dealer X. Thus, as a third-party, MSIL is far from
being an active participant/proposer/inventor of the scheme and is highly akin to
an adjudicator. It merely communicates the appropriate penalty to be levied by the
dealers, as decided amongst themselves, for violation of the mutually agreed-upon
guidelines. MSIL merely playing the role of an independent third-party in the
dealers policing themselves inter se does not amount to having an RPM agreement
qua discounts by MSIL with its dealers. SOP and SPG guidelines of MSIL, which
cover relevant aspects of maintaining quality standards of a dealership, do not
indicate any discount issues. Therefore, MSIL's intention is clearly not to control
the imposition of discounts by the dealers. The dealers merely utilise the father
figure persona of MSIL as an unbiased outside regulator/judge for the scheme.
11.8 There is no possible direct/indirect or perceived benefit to MSIL, irrespective of
whether discounts are kept at a fixed amount, are varying, are partly in cash and
partly in kind. Ultimately, the sale of vehicles of MSIL remains largely unaffected,
and at most the significant and direct effect is only on its dealers. Therefore, there
cannot be any significant motive for MSIL to indulge in such alleged RPM.
Vehicle supply by MSIL to each of its dealers is undertaken on a principal-to-
principal basis and is not a commission based sale. Hence, once MSIL supplies the
vehicle to the dealer, the title of the vehicle passes to the dealer.
11.9 Without prejudice to the above, the alleged conduct of MSIL has not led to and is
not likely to lead to any AAEC. MSIL has submitted that the DG has not
discharged the burden of proof under Section 3(4) of the Act. Vertical agreements
(such as RPM) under Section 3(4) of the Act are not presumed to cause AAEC,
Suo Motu Case No. 01 of 2019 7
and a 'rule of reason' (effects based) approach is adopted for their analysis. It must
be established that a vertical agreement caused or was likely to cause an AAEC.
However, RPM, in fact, rectifies market failures, eliminates free-riding problems
and encourages dealers to compete on non-price factors. In this regard, reliance on
a report prepared by Sapient Econ has been placed by MSIL.
11.10 Even if the alleged Discount Control Policy were to be assumed to compromise
intra-brand competition, this could not have an anti-competitive effect since MSIL
does not have high market power and consumers would rather switch away than
pay a price that they deem too high. The DG has erroneously concluded that
because MSIL has 51% market share, it has market power.
Analysis:
12. The Commission has perused the investigation report submitted by the DG and the
evidence collected by the DG, the suggestions/objections to the DG Report, the
convenience compilation and written arguments filed by MSIL and also heard the oral
arguments made by the learned senior counsel(s) representing MSIL.
13. At the outset, the Commission notes that MSIL is the manufacturer dealing in the
upstream market while its dealers are distributors dealing in the downstream market. As
such, any agreement between MSIL and its dealers can be examined within the scope of
Section 3(4) of the Act, being an agreement amongst enterprises engaged at different
stages or levels of the production chain in different markets.
14. Now, the Commission proceeds to examine whether there was an agreement between
MSIL and its dealers in terms of Section 3(4) of the Act on restricting discounts that may
be offered by dealers.
15. MSIL has argued that the only agreement which MSIL has with its dealers is the
'Dealership Agreement'. In the said agreement, there is no provision to restrict discounts.
In fact, Clause 28.1 of the Dealership agreement specifically allows dealers of MSIL to
provide discounts as they deem fit. The dealers are free to charge a price lower than the
Maximum Recommended Retail Price from consumers. MSIL has submitted that it does
not have the authority to penalise any dealer for giving additional discounts over
Suo Motu Case No. 01 of 2019 8
consumer offers in terms of the Dealership Agreement. There is no clause in the
Dealership Agreement that allows MSIL to levy a penalty on dealers for providing
discounts higher than those prescribed in the consumer offers to the consumers. MSIL
does not exercise control or supervision over the dealers except to maintain a balance
between the satisfaction of consumers and uniformity in schemes. As such, MSIL had no
agreement with its dealers regarding the Discount Control Policy.
16. In this regard, the Commission notes that 'agreement', as defined under Section 2(b) of
the Act, is as follows:
"agreement includes any arrangement or understanding or action in
concert,-
(i) whether or not, such arrangement, understanding or action is
formal or in writing; or
(ii) whether or not such arrangement, understanding or action is
intended to be enforceable by legal proceedings."
From a bare reading of the above provision, it is evident that 'agreement', for the
purposes of Competition Law, is not the same as 'agreement' for the purposes of
Contract Law. Under the Competition Law, an 'agreement' may not be a formal
agreement entered into in writing between two parties. Any kind of mutual arrangement
or understanding between them or action in concert may qualify as an 'agreement'
between the parties for the purposes of Competition Law. The definition of 'agreement'
under Section 2(b) of the Act is very wide and covers all possible agreements/
arrangements/understanding, not only in written form but also in tacit and informal form.
As such, the argument of MSIL that, since the only agreement entered into between
MSIL and its dealers is the Dealership Agreement and the same contains no clause
restricting discounts but rather allows dealers to offer any discounts as they deem fit; it
cannot be said to have any agreement with its dealers for enforcing Discount Control
Policy, is not tenable. Such agreement/arrangement/understanding between MSIL and its
dealers may exist dehors the Dealership Agreement entered into in writing between
them, as examined in the subsequent paragraphs of this order.
Suo Motu Case No. 01 of 2019 9
17. In order to examine whether any such agreement/arrangement/understanding existed
between MSIL and its dealers in terms of Section 3(4) of the Act, the DG has analysed
the e-mail dump submitted by MSIL. In the same, the DG found multiple e-mails
exchanged between MSIL and its dealers which show that MSIL did, in fact, have an
agreement with its dealers to not let them offer discounts to customers beyond those
permitted from time to time by MSIL without MSIL's prior approval. In other words, the
DG found multiple e-mails that prove that MSIL did, in fact, have a 'Discount Control
Policy' in place, for its dealers and the dealers were discouraged from giving extra
discounts, freebies, etc. to consumers beyond what was permitted by MSIL. If found to
be violating the Discount Control Policy, the dealers were 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., and
stopping of supplies.
18. Some such e-mails sent by MSIL managers to dealers in various regions have been
extracted hereunder (emphasis supplied):
E-mail Relevant excerpts of incriminating e-mail
Bihar
E-mail
dated
31.12.2014 Any dealership after price rise from 1st Jan 2015, if found selling/billing on old price will be
sent by considered as violating selling norms and it will be treated as discount offered to the
Manager of customer. We will be observing closing dealer wise rips from tomorrow onwards and
MSIL appropriate action will be taken accordingly.
to dealers
in Bihar
MOM: Discount Control Policy Meeting on 22nd September 2016
To enforce market discipline and adherence to agreed sales policy and norms at dealership,
E-mail
we conducted a meeting at Area Office, Patna on 22nd September '16.
dated
...
04.10.2016
2. Maximum Discount Allowed without Approval - Patna dealers can give maximum
sent by
discount of upto 3 basic accessories (Matting, mudflap and steering cover) or Rs. 1000 ...
Manager of
3. Discount with Approval - The dealer can give discount over and above the set limit with
MSIL
approval from the respective TSM/AM. But the dealer can ask for approval on maximum 2%
to dealers
of cases on the given retail target for the month.
in Patna
4. Discount on Vintage Stock - Dealer can give discount on stock with more than 150 days
but same should be approved from the respective TSM/AM ...
Suo Motu Case No. 01 of 2019 10
E-mail Relevant excerpts of incriminating e-mail
Ranchi
Please the points discussed during the Discount Control Policy Meeting held on 3rd
September, 2014.
Minutes of Meeting:
➢ ...
➢ The Upper Limit for Discounting has been Accepted to be Rs. 2000/- for which dealers
doesn't have to take any approval.
➢ SM has to approve any discount upto Rs. 2000/-.
➢ For Discounts above Rs. 2000/- (maximum Rs. 5000): -
E-mail o Dealers need to take permission for MSIL for any discounts above Rs. 2000/-.
dated o The number of cases should not exceed 2% of the Total Sales of the month for the
03.09.2014 Dealership.
sent by ➢ Process:
Manager of o Enquiry - If Discount is greater than Rs. 2000 > Approval from RO > Discount passed
MSIL o Any deviation from the process will be considered as a Violation of Discount policy.
to dealers o ...
➢ Penalty:
o 1st violation: Rs 50,000
o 2nd violation: Rs 1,00,000
o 3rd violation: Rs 1,50,000
... No discounts to be given on accessories. If any, it should come under Rs. 2000/- discount
as already approved from MSIL. For anything greater than this, Dealers need to take
approval from TSMs.
...
E-mail Subject: Discount Control Policy Meeting - 8th August' 16
dated This is to inform you that we have planned a Discount Control Policy Meeting on 8th August'
05.08.2016 16 at 4:00 PM in Regional Office, Ranchi. Agenda for the meeting:
sent by 1. Revision in earlier formulated policy and guidelines
Manager of 2. Discussion on Market Discipline
MSIL 3. Formulation of policy on audit of files
to dealers 4. Mystery shopping ...
Subject: MOM from Discount Control Policy - Meeting on 8th August' 16
E-mail ...
dated 2. Maximum Discount Allowed without Approval - Both dealers can give maximum
10.08.2016 discount of Rs. 1500 either as cash or accessories. The same will be allowed only when there
sent by is no ongoing booking scheme from RO.
Manager of 3. Discount with Approval - The dealer can give discount over and above the set limit with
MSIL approval from the respective TSM. But the dealer can ask for approval on maximum 2% of
to dealers cases on the given retail target for the month.
4. Discount on Vintage Stock - Dealer can give discount on stock with more than 150 days
Suo Motu Case No. 01 of 2019 11
E-mail Relevant excerpts of incriminating e-mail
but the same should be approved from the respective TSM. The same will be allowed only
when there is no ongoing RIPS support scheme from RO.
Jamshedpur
RE: MOM from Discount Control Policy Meeting on 13th July' 17.
... To enforce market discipline and adherence to agreed sales policy and norms at dealership,
we conducted a meeting at Regional Office, Ranchi on 13th of July' 17 ...
Please find below the key points which were discussed and has to be implemented at the
dealership:
1. Price List
...
E-mail 2. Maximum Discount Allowed without Approval - Both dealers can give maximum discount
dated of Rs. 1500 that too only in accessories. No cash discount is acceptable. ...
13.07.2017 3. Discount with Approval - The dealer can give discount over and above the set limit with
sent by approval from the respective TSM. But the dealer can ask for approval on maximum 2% of
Manager of cases on the given retail target for the month.
MSIL 4. Discount on Vintage Stock - Dealer can give discount on stock with more than 90 days but
to dealers the same should be approved from the respective TSM ...
5. ...
... in case any deviation is found from the above set policies then, accordingly penalty
charges would be levied against the dealer.
Penalty Structure on Violation of Mystery Shopping:
2. Rs 50,000 for 1st Violation
3. Rs. 1,00,000 for 2nd Violation and
4. Rs. 2,00,000 for 3rd Violation and above...
Mumbai and Goa
2. Discount Control:
E-mail As discussed, we need to strictly maintain market discipline in terms of discounting. As per
dated discussion following has been decided by you all:
07.07.2017 a. Discount of 5% on MGA<20k and 10% on MGA>20K
sent by b. Finance subvention maximum upto 0.5% I
Manager of c. Free under body coat I Teflon coating will be considered as policy violation.
MSIL d. Mudflap & Matting - only MGA is allowed as freebee to the customer.
to dealers Dealers who are found not adhering to the market discipline will be considered as policy
violation.
Nasik
E-mail ... We will be starting mystery audits across all the outlets. If any violation of agreed norms is
dated observed during mystery shopping, RO will take immediate penal action against outlet.
21.05.2016 ...
sent by Action Plan-
Manager of ➢ From 23rd May onwards Zero discount has to be offered in any forms to S CROSS and
Suo Motu Case No. 01 of 2019 12
E-mail Relevant excerpts of incriminating e-mail
MSIL BALENO customer.
to dealers ➢ Discount in any forms i.e. accessories (5% on accessories or even matting& mud flap),
finance payout, Insurance or extended warranty will be considered as a violation and
therefore should not be given.
➢ In case of a reference wherein dealership needs to oblige approval for same needs to be
taken from MSIL. Only 2 cases of S Cross per month.
➢ Pricing on the ex-showroom front, insurance, EW, My Nexa card, RTO or GNA should
be same across both the outlets.
➢ Discount can be given only on S Cross 2015 case.
...
Penalty Clause
Penalty Amount
st
1 5,00,000
nd
2 10,00,000
rd
3 15,00,000
th
4 Same will be escalated to top management
Note: Penalty on SM, Sr. RM and RM have to be decided by dealership itself.
Penalty cheque will be collected in each dealership names.
West-1 Region
E-mail
Dear Dealer Owner,
dated
It has been noticed that your dealership has participated in a deal of 4 New Dzire for ...
26.05.2017
This is to advise to stay away from any discounting. If it is established that your dealership
sent by
has extended discounts on this Newly launched vehicle a penalty of 1,00,000/- will be
Manager of
charged to you.
MSIL to
...
dealers
E-mail
dated
26.05.2017
sent by Please refrain from passing any discount on the new product.
Manager of
MSIL to a
dealer
West-2 Region
E-mail As discussed in meeting Today, following changes are proposed and implemented by all of
dated you:
08.07.2016 ...
sent by E. FREEBIES:
Manager of The limit on giving extra offer on MGA is as follows:
MSIL i. If MGA> Rs. 20,000 and <30000 bought by customer, then only 5% discount is allowed.
Suo Motu Case No. 01 of 2019 13
E-mail Relevant excerpts of incriminating e-mail
to dealers ii. If MGA>= Rs. 30,000 and <40000 bought by customer, then only 7.5% discount is
allowed.
iii. If MGA>= Rs. 40,000 bought by customer, then only 10% discount is allowed...
iv. If MGA<= Rs. 20,000 bought by customer, then nothing.
v. The MGA price is as per MRP of the specific product.
vi. AD-on if any will be strictly as per MRP.
We are also modifying our Mystery process, now our auditors will be booking cars also
during negotiation process and may go up to registration and invoicing stage, entire
Financial loss has to be borne by respective dealer apart from Penalty ...
Nagpur
E-mail
dated
Market Discipline:
20.12.2012
Once again informing all the team members that the same has to be strictly followed. Only
sent by
offers communicated by the Regional Office has to be given to the customers. Also ensure
Manager of
prior approval from RM in cases where ever it is required as guided by the RO/AO.
MSIL
to dealers
Purview of Penalty:
• ...
• It was agreed that the maximum permissible limit in MGA is 5% only if the MGA sold on
that vehicle is more than Rs. 20000. For MGA of less than Rs. 20000, No Discount is to
E-mail
be offered on MGA. The price would be on DMS invoice value.
dated
Penalty Amount:
08.05.2013
• Dealership would be penalized Rs. 50,000 for the 1st violation and would go up to Rs.
sent by
2.00 lac for the 4th violation in a step up of Rs 500000 for every case. A flat amount of
Manager of
Rs. 2.00 lac per violation would be levied thereafter.
MSIL
• Violating DSE would be penalised Rs. 5000/-, violating TL would be penalised Rs.
to dealers
10,000/- and GSM/ SM would be penalised Rs. 20,000/-.
• Any DSE caught twice should be sacked from the dealership and black-listed from MSIL
network ...
E-mail
We are once again reminding to adhere to the laid guidelines from RM. We have been
dated
receiving complaints from co-dealers on old price being offered by some dealers in Nagpur.
11.10.2013
All these cases will be personally audited by us in the default dealerships and any deviations
sent by
will be liable for penalty as per the guidelines set in common meeting with CEO's.
Manager of
So, please adhere to the norms and we should fought with competition rather that fighting
MSIL to
with MSIL family.
dealers
Suo Motu Case No. 01 of 2019 14
E-mail Relevant excerpts of incriminating e-mail
E-mail
lnspite of repeated reminders many of you are still are not adhering to the norms set under
dated
market discipline. We are coming across complaints of additional discounts, old price issues,
19.10.2013
delivery to other territories without RO/OA approval etc.
sent by
We are cross checking all these cases personally now and deviation found will have penalty
Manager of
of Rs. 50,000/-. This time there will not be any warning and no justification will be
MSIL to
asked for the cases found with any dealership in the city.
dealers
E-mail As agreed in meetings held at AO, we decided to ensure that the market discipline has to be
dated ensured at all the outlets without any deviation
28.12.2013 CBH started this to benefit dealerships. And once decided it has to be followed in letter and
sent by Spirit. In past few days we have come across some cases where in it seems that the team is not
Manager of interested in following the same.
MSIL to Any deviation without prior approvals will be treated as violation and liable for strict action
dealers against the concerned dealership ...
E-mail Today we have done mystery calling at all the 3 dealerships in Nagpur and the feedback is:-
dated The calling was done to check whether the Dec' 13 offers are still being given to the
08.01.2014 customers or not as we have not continued the offer today
sent by ...
Manager of The way of communicating the offer seems to be different but the idea is that the DSE
MSIL to should not offer or even hint of any extra offer by using these Tricks. This will help in
dealers maintaining market discipline and will also give healthy balance sheet.
...
This has been started to ensure that MSIL (3 dealers) should not lose with each other as we
E-mail have to fight with competition. And discount control is very important part of healthy balance
dated sheet for all the owners. If it is in benefit of the dealership then we should not deviate.
26.02.2014 Taking action and putting penalty on dealership is very easy as we do have cases with us and
sent by on phone also many times it has been proved to SM's in conference calls with DSE offering
Manager of some or the other discount.
MSIL to ...
dealers So, we once again request you to kindly adhere to the said guidelines which is in interest of
dealership but by way of offering discounts over and above the agreed norms will damage
the market discipline ...
North-2 Region
E-mail This mail is in reference to the minutes of the meeting with RM sir in regional office on 12th
dated May 2014
15.05.2014 Please find below details of the discussion and action points:
sent by • As accepted by MD that earlier discounts were being given on approval of GM sales (...)
Manager of will no more be further given. Any approval has to be taken by MD in consent with the
MSIL to regional office.
dealers • MD to ensure ... implementation of vigilant checks to ensure no pilferage on account of
Suo Motu Case No. 01 of 2019 15
E-mail Relevant excerpts of incriminating e-mail
discount or any other mal practices at the dealership
• Standardisation of price list and quotation to be issued to the customer.
This mail is in reference to the meeting held at Chandigarh dated 16th May' 14.
E-mail
...
dated
Following are the points discussed and need immediate corrective actions:-
20.05.2014
Market Discipline:-
sent by
a. It was found that your dealership is violating Market discipline guidelines by offering
Manager of
discounts to the customers.
MSIL to
b. Any violation in future, will attract penal action and also the suspension of Swift & Dzire
dealers
supplies"
North-4 Region
E-mail
dated
21.08.2016 We have also found that few outlets have given extra discounts over and above consumer
sent by offers. Once the same is established with proper recordings available with the agency we are
Manager of initiating actions against the defaulting dealerships.
MSIL to
dealers
E-mail Subject: Violation: Market Discipline
dated Recently we have established a violation in one of the case where in delivery to the customer
26.09.2016 was given with EW waiver which was not approved from RO.
sent byPlease find Attached case where-in Dealership has accorded 4th Year extended warranty
Manager of waiver to customer. This case was reported on internal whats' app Group of all 3 dealers of
MSIL Hissar as well for Market Discipline that no EW or other Discount waiver shall be given to
to dealers this customer.
Meerut
Subject: Dealer discount approval Meerut Territory
Please find appended the format for Discount approvals which Dealership in Meerut
E-mail
territory have to take from the TSM, compulsorily.
dated
S. Dealer Deal Variant Color Name of Customer Discount Reason No. of
26.04.2018
No. name code customer city amount discount
sent by
cases
Manager of
already
MSIL to
approved
dealers
in month
Kolkata
E-mail As per the mentioned case of a deal for ... for 2 Nos Ciaz, this is to state that RO is giving an
dated approval for Rs. 8000 in total (Rs. 4000 per car) and not anything extra, as agreed by the
05.07.2019 dealers
Suo Motu Case No. 01 of 2019 16
E-mail Relevant excerpts of incriminating e-mail
sent by ...
Manager of To add further, any discount or freebies without the approval of Regional Manager through
MSIL to TSM is against market policy and shall be dealt with accordingly, as agreed by the dealers.
dealers
Chennai
E-mail
dated In result of a mystery shopping being done today, it is been found that most dealers in
27.10.2014 Chennai have not implanted this new price list. Celerio AMT prices have been raised by Rs.
sent by 5000 but most of you haven't implemented the same. Still dealers are quoting the old price.
Manager of It is very surprising that dealers are not even able to implement basic things like price list
MSIL uniformly.
to dealers
19. The Commission is of the view that from the exchange of such e-mails between MSIL
and its dealers, an 'agreement' between them to control discounts, in terms of Section
2(b) of the Act, stands established.
20. MSIL has argued that the Discount Control Policy, even if found to be existing in certain
regions, was only a form of policing amongst the dealers themselves inter se, and MSIL
had no role in formulating such a policy, except to enforce the same on behalf of the
dealers as an independent third-party.
21. However, from the above extracted e-mails, it is observed that each and every discount
offered by the dealers of MSIL over and above the customer offers of MSIL, had to be
permitted by MSIL. If discount without prior approval was given, the imposition of a
penalty was threatened. Further, analysis of the above e-mails also shows that the
Discount Control Policy was not a limited evaluation and regulation by MSAs; rather,
meetings on Discount Control Policy were conducted by MSIL and it formulated policies
wherein discounts were defined by way of limiting maximum discount allowed in cash
or in terms of accessories, etc. The dealers were informed by MSIL that no discounts
above the stated discounts are to be offered to consumers. Additionally, MSIL dictated
that any dealership, after price rise, if found selling/billing on old price, will be
considered violating selling norms and it will be treated as a discount offered to
customers. As such, in view of the Commission, MSIL does not seem to be merely a
third-party in such Discount Control mechanism as contended. Further, from the above e-
Suo Motu Case No. 01 of 2019 17
mails, it is also observed that time and again, MSIL circulated communications of
warning and threats of imposing high penalties in case dealers offered extra discounts
without prior approval. Had MSIL merely been an independent third-party, it would not
have been involved in any such act of issuing threats to dealers against the violation of
the Discount Control Policy. MSIL has contended it only monitored the Discount
Control Policy at the behest of dealers as the dealers only intimated to it, violations by
other dealers. In view of the Commission, even if such submission of MSIL is assumed
to be true, nonetheless, the very act of MSIL of monitoring and controlling the discounts
by issuance of threats of penalties etc., with or without the active participation of the
dealers, tantamount to indulgence of RPM by MSIL.
22. It is also noted that, in the e-mail dated 28.12.2013 sent by the Manager of MSIL to the
dealers in Nagpur, it has been stated that the Commercial Business Head ('CBH') of
MSIL had started this to benefit dealerships. In the e-mail dated 20.05.2014 sent by the
Manager of MSIL to dealers in North-2 Region, it was written that "Any violation in
future will attract penal action and also the suspension of Swift & Dzire supplies". There
is no entity except MSIL that is responsible for supplying vehicles to the dealers. As
such, the threat is not only limited to the imposition of penalty but also for stopping the
supply of products. Therefore, since stoppage of supplies can, under all circumstances,
be done only by MSIL, it is evident that Discount Control Policy was imposed by MSIL
and not amongst the dealers inter se. Supply of vehicles cannot be stopped or even
effected by the dealers amongst themselves without the role of MSIL.
23. MSIL has also argued that at least 30% of all MSIL sales made in FY 2018-19 involved
additional discounts by dealers to consumers, which were officially communicated by
such dealers to MSIL. In other words, at least 30% of all sales involved discounts given
and officially admitted by the dealer over and above the declared Consumer Offers.
MSIL has further contended that there were several other forms of discounts, other than
direct cash discounts, which are not included in the said 30%. Hence, MSIL has argued,
even where the Discount Control Policy was deployed by the dealers inter se (and not by
MSIL), this was in an extremely limited set of instances and areas. Since in nearly 30%
of the cases, dealers gave substantially higher discounts without any penal action being
taken against them, no such Discount Control Policy was actually implemented.
Suo Motu Case No. 01 of 2019 18
24. In this regard, it is observed that, even if such a submission of MSIL is taken at face
value, the e-mails extracted above are glaring evidences showing MSIL restricting its
dealers from offering any additional discounts to customers, with threats of imposition of
penalties and stoppage of supplies.
25. It is also nowhere established by MSIL that such discounts were given by such dealers
without seeking any prior approval from MSIL. However, the DG has found e-mails
which show that, where additional discounts in the form of cash discount, accessories,
freebies, etc., were to be offered by dealers, prior approval of MSIL was mandatory.
These e-mails are extracted below:
E-mail Relevant excerpts of incriminating e-mail
E-mail conversation Dealer to MSIL:
dated 06-08.12.2014 PFB few cases where in we seek your approval for deviation in Market
between a dealer in discipline over and above MSIL approved offers.
South-4 Region and Manager to dealer
Manager of MSIL Approved except Dzire Vxi
Dealer to MSIL:
E-mail conversation PFB few cases where in we seek your approval for deviation in Market
dated 15.12.2014 discipline over and above MSIL approved offers. Kindly approve for the
between a dealer in same.
South-4 Region and Manager to dealer
Manager of MSIL Very high level of additional offers. Approved as a special case but you
must curtail.
E-mail conversation Dealer to MSIL:
dated 17-18.12.2014 PFB few cases where in we seek your approval for deviation in Market
between a dealer in discipline over and above MSIL approved offers.
South-4 Region and Manager to dealer
Manager of MSIL Not approved
Subject: Approval for Additional Cash Discount - Vintage Stock
E-mail dated
We have received a Booking for a ALTO K10 LXI CNG for ..., Order #
22.08.2016 sent by a
17123110150118, Booking Date: 09/08/2016.
dealer in South-4
Request your kind approval for additional cash discount of Rs. 5,000/-, as
Region to Manager of
the vehicle 91 days old - MSIL Invoice - 10624503, Date 13/05/2016
MSIL
Chassis - 263118
E-mail dated Customer Name: ...
12.09.2016 sent by a Model: Wagon R
dealer in West-1 Consumer Offer: 10000/- cash + 15000/- accessories
Region to Manager of Remark: Customer wants full amount in cash as has financial constraints.
Suo Motu Case No. 01 of 2019 19
E-mail Relevant excerpts of incriminating e-mail
MSIL
Dealer to MSIL:
Subject: Additional Discount
Customer is Exchanging his old car with us and Expecting cash Discount of
E-mail conversation
Rs. 15000/- and Matting over and above consumer offer. Kindly approve
dated 07.11.2017
Manager to dealer
between a dealer in
why you want to give additional offers?
West-1 Region and
Dealer to MSIL
Manager of MSIL
This is to close exchange car deal
MSIL to Dealer
Ok as an exception
Dealer to MSIL
This is in the reference of our customer ... . He visited to our showroom on
8th July and interested in purchase of Swift VV White. We need to offer
E-mail conversation
some discount to him to get the order. Please advice.
dated 09.07.2018
MSIL to Dealer
between a dealer in
We appreciate your efforts and sincerity but please understand that selling
NCR and Manager of
cars in discount is not a healthy option for dealership as this tends to
MSIL
encourage easy selling for the entire sales team. Since selling with
discounts is also not allowed across the region so it would be better if you
put efforts in building team capability skills to sell on merits.
In continuous to above subject, the below customer is the ... and they have
E-mail dated booked the car in this son name.
13.11.2018 sent by a As a good will gesture we would like to extend the benefit of Rs. 3000/- for
dealer in South-2 the below customer.
Region to Manager of His card is mentioned below for your reference.
MSIL The customer is not booked the car with any other dealer.
Seeking your kind approval on the same.
As per the mentioned case of a deal for ... for 2 Nos Ciaz, this is to state
that RO is giving an approval for Rs. 8000 in total (Rs. 4000 per car) and
not anything extra, as agreed by the dealers..."
E-mail dated
This is the last and final time an approval of such a case is being given as a
05.07.2019 sent by
special scenario and RO will not consider or entertain any such request in
Manager of MSIL to
the future without proper confirmation from customer regarding purchase
dealers in
intent from a specific dealer only, as agreed by the dealers.
Kolkata
To add further, any discount or freebies without the approval of Regional
Manager through TSM is against market policy and shall be dealt with
accordingly, as agreed by the dealers.
Suo Motu Case No. 01 of 2019 20
26. From the above extracted e-mails, it is evident that the Discount Control Policy was
controlled by MSIL itself, not by the dealers or the MSAs. Approval for providing
additional discounts was also directly sought from the Managers of MSIL, which was
either approved or denied. As such, MSIL was not a mere third-party in imposing the
Discount Control mechanism as contended. Rather, it is clear that MSIL was the
approving authority of the maximum discounts that may be offered by its dealers to
customers, despite its claim that it had a principal-to-principal relationship with the
dealers.
27. From a comprehensive analysis of the e-mails extracted above, it is apparent that MSIL
did, in fact, have an agreement with its dealers in terms of Section 3(4)(e) of the Act,
whereby it restricted the discounts that may be offered by dealers to customers without
its prior permission.
28. Further, from the e-mail dump submitted by MSIL, the DG also found several e-mails
which show that, for non-adherence to such a Discount Control Policy of MSIL, the
dealers were penalised. To enforce its Discount Control Policy, MSIL used to appoint
MSAs who used to pose as customers to MSIL dealerships to find out if any additional
discounts were being offered by such dealerships to customers or not. If found offered,
the MSA would report to MSIL management with proof (audio/video recording) who, in
turn, would send an e-mail to the errant dealership with a 'Mystery Shopping Audit
Report', confronting them with the additional discount offered and asking for
clarification. If clarification was not offered by the dealership to the satisfaction of
MSIL, penalty would be imposed on the dealership and its employees, accompanied in
some cases, by the threat of stopping supplies. MSIL would even dictate to the dealership
where the penalty had to be deposited.
29. Some such e-mails sent by MSIL to dealers in various regions with regard to the
appointment of MSAs and conducting Mystery Shopping, are extracted hereunder
(emphasis supplied):
Suo Motu Case No. 01 of 2019 21
E-mail Relevant excerpts of incriminating e-mail
North-1 Region
E-mail dated
It has come to my notice that some Dealers are trying to do some violation of
24.12.2013 sent
market discipline norms ... as the month-end is approaching.
by Commercial
Let me inform you that we will mercilessly initiate MULTIPE Penal action, if
Business Head-
required, to stop this menace at any cost.
NCR of MSIL to
The message is clear
dealers in NCR
It is learnt that few Dealerships are trying to violate some of the prescribed
E-mail dated policies & guidelines on Market Discipline ... we have intensified &
27.03.2014 sent strengthen the process of mystery shopping & will not hesitate to take action
by Manager of on the erring Dealers.
MSIL to dealers Please treat this as STERN WARNING and advise your teams for Strict
Compliance to avoid penal action against the Dealership/ E-outlet.
It is learnt that few Dealerships in Faridabad cluster are trying to violate some
E-mail dated
of the prescribed policies & guidelines on Market Discipline ... we have
03.07.2014 sent
intensified & strengthen the process of mystery shopping & will not hesitate to
by Manager of
take action on the erring Dealers.
MSIL to dealers
Please treat this as STERN WARNING and advise your teams for Strict
in Faridabad
Compliance to avoid penal action against the Dealership/ E-outlet.
Jodhpur
Subject: Market Discipline Policy - Jodhpur Territory
Mystery Audit will be conducted from Regional Office to check for any
violations in terms of extra discounts given over and above MSIL Offers.
E-mail dated Mystery Shopping agency- ... would be conducting the same for Jodhpur...
10.07.2015 sent Mystery shopping will commence from next week.
by Manager of Please find attached the discount control policy document in case of any
MSIL to dealers violation..."
Attachment to the said e-mail is a file named 'Discount Control-
Jodhpur.docx' which contains gist of quantum of penalties to be imposed on
Maruti Suzuki Dealership in case of violation of discount policy.
Patna
To keep a check on the above points the below activity, Mystery shopping and
audits will be done at all the 4 dealer outlets in Patna:
a.) Mystery Shopping- Physical Visit/ Tele-calling (on monthly basis):
E-mail dated
The mystery shopper will be auditing on the below points:
04.10.2016 sent
•Contents of quotation as per given format and ongoing offer
by Manager of
•Additional discount
MSIL to dealers
•...
In case any deviation is found from the above set policies then, accordingly
penalty charges would be levied against dealer. The details of the same will be
Suo Motu Case No. 01 of 2019 22
E-mail Relevant excerpts of incriminating e-mail
shared later..."
Ranchi
To further improve the quality and efficiency of the quality of sales parameters
and proper implementation of agreed sales policies and norms at all MSIL
dealerships, we have hired a new professional agency to undertake this activity
across all Ranchi territory.
The proposed activity will involve both personal visits to showrooms as well as
E-mail dated telephone calls to each showroom. To start with, the Mystery Shopper will
25.08.2014 sent have physical visit on weekly basis to all the 4 Outlets of Ranchi, and Mystery
by Manager of calls in frequency of 2-3 days to each outlet.
MSIL to dealers This module will enable dealership's compliance to company's price list,
customer docket, OBC implementation, agreed Additional Discount, etc. other
than the audit of agreed Sales policies and norms of MSIL.
...
This will also place a check on the discount front as faced by the dealership in
many cases.
Please the points discussed during the Discount Control Policy Meeting held
on 3rd September, 2014.
Minutes of Meeting:
➢ MSIL has hired an agency to conduct Mystery Shopping across Maruti
E-mail dated
Dealership to control discount in Ranchi.
03.09.2014 sent
➢ The mystery shopper will pose as a normal customer and will enquire, give
by Manager of
booking and take delivery in certain cases as well.
MSIL to dealers
➢ ...
➢ The mystery shopper will physically visit dealerships in every 2-3 days.
➢ The mystery shopper will perform mystery calling in every 2-3 days.
➢ Voice Recording or Video will be considered as a proof for discounts.
Subject: Discount Control Policy Meeting - 8th August' 16
This is to inform you that we have planned a Discount Control Policy Meeting
E-mail dated on 8th August'16 at 4:00 PM in Regional Office, Ranchi. Agenda for the
05.08.2016 sent meeting:
by Manager of 1. Revision in earlier formulated policy and guidelines
MSIL to dealers 2. Discussion on Market Discipline
3. Formulation of policy on audit of files
4. Mystery shopping...
E-mail dated Subject: MOM from Discount Control Policy - Meeting on 8th August' 16
10.08.2016 sent To keep a check on the above points the below activity will be done at all the 4
by Manager dealer outlets in Ranchi:
of MSIL to a.) Mystery Shopping-Physical Visit/ Tele-Calling (on monthly basis):
dealers The mystery shopper will be auditing on the below points:
Suo Motu Case No. 01 of 2019 23
E-mail Relevant excerpts of incriminating e-mail
•...
• Additional discount
...
In case any deviation is found from the above set policies then, accordingly
penalty charges would be levied ...
Subject: RE: MOM from Discount Control Policy Meeting on 8th August' 16
E-mail dated The below policy and guidelines are applicable from 16th August' 16. To keep a
22.08.2016 sent check on the above points, the mystery shopping will start from 25th August'
by Manager of 16. Other details will be shared tomorrow via another e-mail id.
MSIL to dealers Kindly ensure that each and every point have been informed to the entire sales
team.
Subject: RE: MOM from Discount Control Policy Meeting on 8th August' 16
E-mail dated Please find attached mystery shopping report for the month of August' 16 in all
05.09.2016 sent the 4 outlets. The model selected for the same was Alto 800. As per the agency,
by Manager of no additional discount was offered to the customer.
MSIL to dealers ...
Subject: SM-GM Meet on Discount Control Policy at RO
In the last few days, we have been receiving complaints on discounting by both
the dealer outlets (...). I had already shared the mail with you regarding
E-mail dated
clarification on the same.
19.09.2016 sent
To further discuss on the same we would like SM-GMs from all 4 outlets to be
by Manager of
present in RO at 4 pm tomorrow ...
MSIL to dealers
We have also asked the mystery shopping agency to be vigilant and but if the
cases are increasing then, I would suggest we do 100% audit of all the files
because it is not possible to catch hold of discount case in one or two visit.
Jamshedpur
Mentioned below are the update of Action points post visit of Sr. EO (M&S).
Concerned Action Current Status
Deadline
Area plan/Target
E-mail dated
MSIL to take 1) CA agency has been
22.08.2014 sent
strict action finalised.
by Manager of
Discounting against 2) Briefing of agency done
MSIL to dealers
by Co. defaulters and Aug'14 regarding work to be done.
dealer discount 3) Agency has started
control to be Mystery shopping w.e.f. Aug'
implemented. 14.
E-mail dated To further improve the quality and efficiency of the quality of sales parameters
25.08.2014 sent and proper implementation of agreed sales policies and norms at all MSIL
by Manager of dealerships, we have hired a new professional agency to undertake this
Suo Motu Case No. 01 of 2019 24
E-mail Relevant excerpts of incriminating e-mail
MSIL to dealers activity across all Jamshedpur territory. The proposed activity will involve
both personal visits to showrooms as well as telephone calls to each
showroom. To start with, the Mystery Shopper will have physical visit on
weekly basis to all the Outlets & E outlets of Jamshedpur territory, and
Mystery calls in frequency of 2-3 days to each outlet.
This module will enable dealerships compliance to company's price list,
customer docket, OBC Implementation, agreed Additional Discount, etc. other
than the audit of agreed Sales policies and norms of MSIL.
...
This will also place a check on the discount front as faced by the dealership in
many cases.
Subject: RE: MOM from Discount Control Policy Meeting on 13th July'17
To enforce market discipline and adherence to agreed sales policy and norms at
dealership, we conducted a meeting at Regional Office, Ranchi on 13th of July'
17. The purpose of the meeting was to formulate a transparent market policy
with consensus from both the dealers of Jamshedpur territory.
E-mail dated ...
13.07.2017 sent To keep a check on the above points the below activity will be done at all the 3
by Manager of dealer outlets in Jamshedpur:
MSIL to dealers (i) Mystery Shopping-Physical Visit/ Tele-calling (on monthly basis):
The mystery shopper will be auditing on the below points:
• Contents of quotation as per given format and ongoing offer
• Additional discount
•...
• Exchange bonus and pricing ...
West-2 Region
This has reference to the meeting we had at Regional Office on 7th August 2012
in the presence of ... CBH West, ... Regional Manager West and the sales team
E-mail dated
of West 2, to discuss on ways to bring about Market discipline.
10.08.2012 sent
... based on the same you all have agreed upon the following:
by Manager of
Market Discipline -
MSIL to dealers
Process to Be Followed:
• The current system of mystery shopping at Dealership outlets would continue.
"First of all, I would like to convey sincere thanks for your active participation
in Market Discipline meeting held on 5th August 2015...
E-mail dated
Please find below mutually agreed implementation points with respect to Market
06.08.2015 sent
discipline & Sales operating procedures, wherein you have agreed on following
by Manager of
parameters/ amendments:
MSIL to dealers
We will be starting mystery audits across all outlets/ Workshops/ TV outlets/
MDS from 10th Aug. If any violation of agreed norms is observed during
Suo Motu Case No. 01 of 2019 25
E-mail Relevant excerpts of incriminating e-mail
mystery shopping, RO will take immediate penal action against the outlet.
...
E.) Freebies:-
The limit on giving extra offer on MGA is as follow:
I. If MGA>Rs. 20,000 bought by customer, then only 5% discount is
allowed.
II. If MGA<= Rs. 20,000 bought by customer, then nothing.
III. The MGA price is as per MRP of specific product.
IV. Ad-on if any will be strictly as per MRP.
I am sure, by now below agreed norms are discussed and informed to people
E-mail dated
associated with your organisation loud and clear.
08.08.2015 sent
We are starting mystery audits from 10th Aug.
by Manager of
And please note, any additional offer given on other than dealership quotation
MSIL to dealers
format will be treated as violation only.
We are also modifying our Mystery process, now our auditors will be booking
Email dated
cars also during negotiation process and may go up to registration and
08.07.2016 sent
invoicing stage, entire financial loss has to be borne by respective dealer apart
by Manager of
from Penalty.
MSIL to dealers
...
Nasik
... We will be starting mystery audits across all the outlets. If any violation of
agreed norms is observed during mystery shopping, RO will take immediate
penal action against outlet."
E-mail dated
Action Plan-
21.05.2016 sent
➢ From 23rd May onwards Zero discount has to be offered in any forms to S
by Manager of
CROSS and BALENO customer.
MSIL to dealers
➢ Discount in any forms i.e. accessories (5% on accessories or even matting&
mud flap), finance payout, Insurance or extended warranty will be
considered as a violation and therefore should not be given.
Hyderabad
"Kindly find the minutes of meeting on market discipline that was held on 29th
April 2015.
• All the dealers have agreed to appoint ... as the both Market Discipline
E-mail dated Agency and Docket File Agency for their dealerships.
30.04.2015 sent • ...
by Manager of • Market Discipline will not only cover discount issues but also give an
MSIL to dealers insight on dealer's SOS implementation which would be shared with
dealerships on monthly basis."
The PPT attached with the e-mail under filename 'MSIL AP Telangana - DA
PPT 2015 Final PPT' states that:
Suo Motu Case No. 01 of 2019 26
E-mail Relevant excerpts of incriminating e-mail
Purpose: Purpose of the audit is to ensure that the dealership is pricing their
cars as per the standard price list and also to ensure that no illegal discounts
are being extended to the customer.
Chennai, Coimbatore and Madurai
The second important and critical aspect would be to audit 'Implementation of
Market Discipline' in multi-dealer city locations. This audit would evaluate the
transparency and consistency of the sales process and market discipline as per
Email dated
MSIL norms being religiously followed in all outlets. The violation of sales
18.02.2015 sent
process identified in this would be treated seriously and following penalty
by Manager of
would be levied on the earring dealerships"
MSIL to dealers
... We have designed an elaborate scale on which audit would be conducted by
along with
a third party agency. The scale consists of various points mounting upto 1000
attachment
points ...
'MYSTERY
The attachment in the e-mail i.e. 'Mystery Shopping Score Card' has at Sl. No.
SHOPPING
8, 'Discounts Offered' and the same, amongst others, has following Critical
SCORE CARD'
Parameters:
• Did not provide excessive discount in Cash over and above consumer offer ...
• Did not provide freebies like MGA, Teflon Coating, Removing EW/ MI etc.
Trivandrum
During the mystery shopping audit on Quality of Sales in Kerala, we have
observed a violation from ...
Details of the violation and the penalty for this deviation is mentioned below.
Should you choose to verify the recording and revert, the nominated person can
E-mail dated get in touch with ...
15.09.2018 sent Subsequent to this, we would appreciate strict action taken and the same
by Manager of shared with us.
MSIL to a dealer No. of Date of
Dealer Location Penalty Model Deviation
violation violation
Àlto
Rs. 4500
... Trivandrum 1 1,00,000 6.9.18 K10
basic kit
AMT
Request you to kindly arrange to make the payment towards the quality of
E-mail dated sales deviation observed at your outlet to the below mentioned account details.
17.10.2018 sent The invoice along with the bank details against the same is also attached.
by Manager of Account Name - T Sriram , Mehta & Tadimalla
MSIL to a dealer Account No...
IFSC....
Suo Motu Case No. 01 of 2019 27
30. Again, MSIL argued that the appointment of MSAs was done by the dealers only and
MSIL had no role to play in this regard. MSIL has submitted that the above e-mails,
when read in entirety along with their trail mails, would show that the e-mails contained
statements to the effect that the dealers had agreed to the sales policies of MSIL etc.
Further, MSIL has argued that the invoices issued by the MSAs are also in the names of
the dealers only.
31. In this regard, the Commission, upon holistic reading of the above e-mails, observed that
MSIL has tried to pick-up isolated statements from its e-mails, which appear to be self-
serving statements, to allege that it was the dealers who had appointed the MSAs.
However, the Commission is of the view that such statements relied upon by MSIL
merely show that the dealers may have willingly agreed to the proposals put forward by
MSIL or that they had no choice but to agree with the proposal put forth by MSIL, in the
meetings held between MSIL and the dealers. From perusal of these entire e-mails along
with their trail mails, it is observed that such statements do not in any way, imply that the
MSAs were hired by the dealers themselves. It is evident from the above e-mails that the
MSAs were hired by MSIL, and it was MSIL that decided the mode and frequency of the
visits of MSAs. MSIL also informed the dealers where the penalty was to be deposited.
There is absolutely no indication in the above e-mails that the appointment of MSAs was
done by the dealers themselves. Further, it is evident from multiple e-mails that MSIL
made it clear that the cost of appointment of MSAs would be borne by the dealers. As
such, certain invoices of some MSAs may be in the name of the dealers. In view of the
above, MSIL's contention that because invoices were issued in the name of the dealers,
as such, MSAs were appointed by the dealers themselves, holds no value.
32. Further, MSIL has stated that there are 331 parent dealers (for all MSIL models put
together) and 3067 outlets of MSIL across India. In view of the Commission, even if
only the parent dealers are taken into account, with so many dealers spread across the
geographical breadth of the country, it is nearly impossible for dealers to agree and
appoint MSAs and implement imposition of penalties themselves, without such an act
being organised and monitored by MSIL.
Suo Motu Case No. 01 of 2019 28
33. It is noted from several e-mails exchanged between MSIL and its dealers that penalties
were imposed by MSIL on the errant dealerships and their concerned individuals for
violation of Discount Control Policy by first sending them an audio clip of the Mystery
Shopping Audit and seeking clarification therefrom. If the clarification offered was not
found acceptable, MSIL imposed penalties. MSIL also informed dealers where the
penalty amount should be deposited and consistently reminded them about pendency of
payment of their penalty amounts.
34. Some examples of imposition of penalty by MSIL for the violation of the Discount
Control Policy, as extracted from e-mails of MSIL, are tabulated hereunder:
Period Additional discounts offered by Dealer Penalty imposed
Pune
Dealer - ₹1,00,000
Additional GM/ SM - ₹25,000
Particular Norm Offered
discounts TL - ₹10,000
Accessories 0 ₹3,000 ₹3,000 DSE - ₹5,000
Feb. 2016 Cash MSIL asked dealer to submit
₹25,000 ₹30,000 ₹5,000
discount cheque of total penalty
₹8,000 amount of ₹1,40,000 at
regional office in the name of
Ms. Swati Kale.
Dealer - ₹50,000
GM/ SM - ₹20,000
TL - ₹10,000
Additional
Particular Norm Offered DSE - ₹5,000
discounts
May 2016 MSIL asked dealer to submit
Accessories 0 ₹1,850 ₹1,850
cheque of total penalty
₹1,850
amount of ₹85,000 at regional
office in the name of Ms.
Swati Kale.
Additional Dealer - ₹50,000
Particular Norms Offered
discounts GM/SM - ₹20,000
Accessories 0 ₹3,000 ₹3,000 TL - ₹10,000
Aug - Sep
Cash DSE - ₹5,000
2017 ₹25,000 ₹28,000 ₹3,000
discount Dealership to also take
disciplinary action against
DSE.
Suo Motu Case No. 01 of 2019 29
Dealer - ₹50,000
GM/SM - ₹20,000
TL - ₹10,000
Additional
Particular Norms Offered DSE - ₹5,000
discounts
June 2016 MSIL asked dealer to submit
Cash
₹5,000 ₹9,428 ₹4,428 cheque of total penalty
discount
amount of ₹85,000 at regional
₹4,428
office in the name of Ms.
Swati Kale.
Additional
Particular Norm Offered
July - discounts Dealer - ₹2,00,000 as second
August 2018 Cash violation.
₹25,000 ₹30,000 ₹5,000
discount
Dealer - ₹1,00,000
GM/SM - ₹25,000
TL - ₹10,000
DSE - ₹5,000
Particular Amount
April 2016 MSIL asked dealer to submit
Additional discounts ₹7,396
cheque of total penalty
amount of ₹1,40,000 at
regional office in the name of
Ms. Swati Kale.
Dealer - ₹50,000
RM - ₹10,000
Additional
Particular Norm Offered SRM - ₹15,000
discounts
April 2018 SM - ₹25,000
Cash
₹25,000 ₹30,000 ₹5,000 Dealership to also take
discount
disciplinary action against
RM and SRM.
Dealer - ₹50,000
RM - ₹10,000
Additional
Particular Norm Offered SRM - ₹15,000
discounts
April 2018 SM - ₹25,000
Cash
₹25,000 ₹39,000 ₹14,000 Dealership to also take
discount
disciplinary action against
RM and SRM.
Suo Motu Case No. 01 of 2019 30
Dealer - ₹50,000
RM - ₹10,000
Additional
Particular Norm Offered SRM - ₹15,000
discounts
SM - ₹25,000
April 2018 Cash
₹20,000 ₹30,000 ₹10,000 Dealership to also take
discount
disciplinary action against
RM and SRM.
Worli
Dealer - ₹50,000
GM - ₹5,000
CEO - ₹5,000
Apr 2017 Additional discount of ₹3,000 offered
SM - ₹5,000
DSE - ₹2,000
Kolkata
Additional offer given as music system to customer
Aug 2014 Dealer - ₹2,00,000
other than prescribed offers
Delhi
Multiple violations informed by OP to dealer:
• Discount of S Cross model
Total penalty imposed -
Aug 2016 • Delivery of cars outside prescribed territory
₹10,00,000
• Demanding premium for early delivery of Brezza
• Demanding premium for early delivery of Baleno
Haryana
Applicable Consumer Additional
Particular
offer offer discounts
Feb 2017 Dealer - ₹20,000
Consumer
25,000 20,000 5,000
offer
Jamshedpur
Nov. 2017 Extra discount of ₹1,985 offered
Jan. 2018 Extra cash discount of ₹5,151 offered
For second violation, the
Extra cash discount of ₹5,000 offered on Dzire VDI
dealer penalised with
and
Sept. 2018 ₹1,00,000.
Extra cash discount of ₹25,000 + Fake Exchange
offered on WagonR VXI
Cochin
Penalty of ₹1,00,000 to be
Sept. 2018 to Extra cash discount of ₹5,000 + Free Teflon offered deposited in the account of T
Jan 2019 on Alto K10 AMT Sriram, Mehta and Tadimalla.
Suo Motu Case No. 01 of 2019 31
Trivandrum
Penalty of ₹1,00,000 to be
Sept. to Nov. deposited in the account of T
Extra ₹4,500 Basic Kit offered on Alto K10 AMT
2018 Sriram, Mehta and Tadimalla
in Axis Bank Ltd.
35. It is noted from the above e-mails that, in the territory of Pune, Maharashtra, the
dealerships were to give the penalty cheque in the name of one Ms. Swati Kale. Ms.
Swati Kale is the wife of Mr. Vinod Kale, who is the President of Wonder Cars Pvt. Ltd.,
an MSIL dealership in Pune, Maharashtra.
36. When Ms. Swati Kale was questioned by the DG, she submitted that her role was to
receive cheques as per the instructions of the Regional Manager of MSIL and deposit the
same in her account and issue cheques as per his instructions as and when required. Ms.
Swati Kale also submitted her statement of accounts showing credit entries for penalty
amounts and debit entries for cheques issued.
37. Further, Ms. Swati Kale also submitted some e-mails showing the manner in which such
penalty amounts were utilised as per the instructions received from MSIL. Some such e-
mails are extracted hereunder:
E-mail Relevant excerpts of the e-mail
As directed by Zonal office Mumbai, Regional office West 2 has released
advertisement from the budget kept under Market Discipline activities in the
E-mail dated
month of September' 17 through Pratisaad Communications Private Limited.
27.10.2017 from
Please find herewith attached invoices of the ad released. Total amount is
MSIL to Mr.
INR 18,89,657. Request you to please release the payment in the name of
Vinod Kale
Pratisaad Communications Private Limited ...
Also, after releasing the payment, please share statement of account.
As directed by Zonal office Mumbai, Regional office West 2 has released
advertisement from the budget kept under Market Discipline activities in the
E-mail dated
month of December' 17 through Pratisaad Communications Private Limited.
05.01.2018 from
Please find herewith attached invoices of the ad released. Total amount is
MSIL to Mr.
INR 8,58,935. Request you to please release the payment in the name of
Vinod Kale
Pratisaad Communications Private Limited ...
Also, after releasing the payment, please share statement of account.
E-mail dated
Pls transfer 10 lacs to below a/c code in reference to Dealers meet at Goa on
09.11.2016 from
19th Nov. ...
MSIL to Mr.
Suo Motu Case No. 01 of 2019 32
E-mail Relevant excerpts of the e-mail
Vinod Kale
38. From the above e-mails, it is observed that the amount collected in the account of Ms.
Swati Kale was used by MSIL, inter alia, to pay the bills of advertisements. The e-mails
clearly indicate that the advertisements under reference had been released by the
Regional Office, West-2, MSIL, as per the directions of the Zonal Office and not by any
dealer(s). Thus, the penalty amounts were clearly imposed by MSIL and collected in the
account of Ms. Swati Kale as per the directions of MSIL, and the amounts were also
utilised as per the instructions of MSIL. Hence, the submission of MSIL, of it being a
mere third-party in the enforcement of the entire Discount Control mechanism through
the appointment of MSAs, stands completely struck down. It is clear from the
submission of Ms. Swati Kale that she was merely the keeper of the penalty funds in the
territory of Pune; the management of such penalty funds however, lay with MSIL, and
the amounts therefrom were utilised as per the directions of MSIL managers.
39. The e-mails extracted above clearly show that MSIL not only imposed the Discount
Control Policy on dealers, but also enforced the same by monitoring dealers through
MSAs, imposing penalties on them and threatening strict action like stoppage of supply,
collection and recovery of penalty and utilisation of the same.
40. Once an agreement between MSIL and its dealers in terms of Section 3(4) of the Act
regarding Discount Control Policy is established, and it is also established that MSIL not
only imposed but even enforced such an agreement, the Commission now proceeds to
analyse if any AAEC in the market has been caused or was likely to be caused as a result
of such an agreement between MSIL and its dealers.
41. 'Resale Price Maintenance' as defined under Explanation (e) to Section 3(4) of the Act
includes "any agreement to sell goods on condition that the prices to be charged on the
resale by the purchaser shall be the prices stipulated by the seller unless it is clearly
stated that prices lower than those prices may be charged".
42. The Commission notes that the imposition of maximum discount limits by MSIL upon
its dealers amounts to RPM within the meaning of the above extracted provision.
Suo Motu Case No. 01 of 2019 33
43. As per the provisions of Section 19(3) of the Act, for determining AAEC, if any, caused
or likely to be caused as a result of any agreement entered into within the meaning of
Section 3 of the Act, including RPM, due regard to all or any of the following factors
shall be had by the Commission:
(i) Creation of barriers to new entrants in the market;
(ii) Driving existing competitors out of the market;
(iii) Foreclosure of competition by hindering entry into the market;
(iv) Accrual of benefit to consumers;
(v) Improvements in production or distribution of goods or provision of services; or
(vi) Promotion of technical, scientific and economic development by means of
production or distribution of goods or provision of services.
44. As such, the Commission proceeds to analyse AAEC in terms of the factors stated under
Section 19(3) of the Act.
45. The Commission notes that RPM can prevent effective competition both at the intra-
brand level as well as at the inter-brand level. When a minimum RPM is imposed by the
manufacturer upon the distributors, the distributors are prevented from decreasing the
sale prices beyond the imposed limit. In other words, the mechanism does not allow the
distributors to compete effectively on price. As such, stifling intra-brand competition
results in higher prices for consumers.
46. In the instant case, the RPM enforced upon the dealers by MSIL has led to denial of
benefits to the consumers in terms of competitive prices being offered by MSIL dealers.
When all the dealers are controlled by a Discount Control Policy, they are forced to sell
the same product at the same price which, to a large extent, eliminates price competition
amongst them. As such, due to almost nil intra-brand competition amongst MSIL
dealers, the consumers would have had to purchase MSIL vehicles at fixed prices
without flexible discounts being offered to them by MSIL dealers, thereby leading to
charging of higher prices/ denial of discounts in kind, to them. Such arrangements
perpetuated by MSIL restricted intra-brand competition amongst MSIL dealers, as it
impaired their ability to compete with respect to prices in the sale and distribution of
MSIL brand cars. There are numerous instances noted above whereby dealers have
Suo Motu Case No. 01 of 2019 34
offered additional discounts to the MSAs assuming them to be genuine consumers, and
have been levied financial penalties for their such conduct by MSIL. As such, it is
evident that had there been no Discount Control Policy enforced by MSIL, customers of
MSIL would have been able to buy MSIL vehicles at lower prices. This has resulted in
the denial of benefits to consumers, which would have otherwise been accrued to them in
a healthy competitive environment between dealers. The anti-competitive impact of such
a practice of MSIL is reinforced by the fact that MSIL has more than 50% market share
in the passenger vehicles segment, as observed by the DG.
47. MSIL has argued that its market share keeps fluctuating and that if the prices of MSIL
vehicles are kept high, consumers always have the choice of switching over to vehicles
of other brands. As such, high market share of MSIL holds no nexus with any AAEC
being caused.
48. The Commission however, is of the view that, imposition and enforcement of RPM by a
player like MSIL, having a significant market share, not only thwarts intra-brand
competition but also leads to the lowering of inter-brand competition in the passenger
vehicles market. When a significant player such as MSIL imposes minimum selling price
restrictions in the form of maximum discount that can be offered by the dealers, RPM
can decrease the pricing pressure on competing manufacturers. This is more so in case of
dealers who may be in an interlocking relationship with multiple manufacturers. When
all dealers of MSIL are selling vehicles at similar prices, the prices of MSIL vehicle
models can be easily comprehended by other players in the market. Being aware of the
similar prices of MSIL's dealers due to prevalence of RPM in the passenger vehicle
segment, the other OEMs can easily monitor MSIL's prices and also factor it in their
pricing strategy, thereby softening competition. As such, it relaxes competitive pressure
upon them and they can price their competing models accordingly, which due to the
prevalence of RPM, may be priced higher than a competitively determined price. This
phenomenon creates an obstruction for consumers to avail the benefit of competition in
pricing across different brands as well.
Suo Motu Case No. 01 of 2019 35
49. It is known that RPM as a practice by multiple manufacturers is conducive for
monitoring of tacit collusion among such manufacturers. Higher prices under RPM can
exist, even when a single manufacturer imposes minimum RPM. This is more likely in
the case of multi-brand dealers who have significant bargaining power because of their
ability to substitute one brand with another. Further, this leads to another likely anti-
competitive effect of higher prices across all brands even if there is no upstream or
downstream conspiracy, because preventing price competition on a popular brand would
result in higher prices of competing brands as well, including those that have not adopted
RPM. Thus, minimum retail price RPM has the effect of reducing inter-brand price
competition in addition to reducing intra-brand competition.
50. Further, in terms of the factors stated under Section 19(3) of the Act, the impugned
agreement/arrangement did not result in accrual of any consumer benefits; rather, the
same resulted in denial of benefits to consumers as they were made to pay high prices.
Further, the said arrangement/agreement is not resulting in any improvements in
production or distribution of goods or provision of services. The arrangement/agreement
perpetuated by MSIL also hindered in the distribution of goods and the provision of
services in relation to new cars. The arrangement/agreement put in place by MSIL also
resulted in creation of barriers to new entrants/dealers in the market as the new dealers
would take into consideration restrictions on their ability to compete with respect to
prices in the intra-brand competition of MSIL brand of cars. Hence, the arrangement
perpetuated by MSIL in fixing the resale price of MSIL brand of cars in the manner, as
discussed above, foreclosed intra-brand price competition for its dealers as well as stifled
inter-brand competition.
51. MSIL has argued that there is no possible direct/indirect or perceived benefit to MSIL by
enforcing any Discount Control Policy amongst its dealers. The sale of vehicles of MSIL
is largely unaffected by this and, at the most, the direct effect is only on dealers.
Therefore, there cannot be any significant motive for MSIL to indulge in such alleged
RPM. Vehicle supply by MSIL to each of its dealers is undertaken on a principal-to-
principal basis and is not a commission-based sale. Hence, once MSIL supplies the
vehicle to the dealer, the title of the vehicle passes to the dealer.
Suo Motu Case No. 01 of 2019 36
52. The Commission is, however, of the view that by controlling the dealers' margin, inter
brand competition softens due to ease of monitoring of retail prices by the competitors.
This provides the manufacturer more liberty to regulate its own margin freely. Thus,
RPM lowers the pressure on the margin of the manufacturer. As such, MSIL may have a
motive to indulge in RPM through the Discount Control Policy. Anyhow, motive or
mens rea of the alleged violator of Competition Law is of no value or significance.
53. MSIL has also contended that RPM through such Discount Control Policy has pro-
competitive effects like the elimination of free-riding problem.
54. However, the Commission is of the view that the SOP and SPG put in place by MSIL
provide a very clear and detailed description for working of MSIL dealers in terms of
services to be rendered to the customers and other pre-sales services. Further, admittedly,
these services are also monitored by MSIL through MSAs and the imposition of
penalties. As such, considering such detailed guidelines for dealers backed by sanctions,
there is very little scope for issues like free-riding. All dealers of MSIL are subjected to
the SOP/SPG and non-compliance with the same also results in the imposition of
penalties. As such, the justification put forth by MSIL, that RPM is required to eliminate
the problem of free-riding, is not tenable.
55. Though MSIL has argued that SOP/SPG may not be sufficient to solve the free-riding
problem, and neither can they be fully monitored, the Commission observes that even a
vertical restraint like RPM may not be the solution to such a problem. Eliminating price
competition between dealers may not necessarily incentivise them to pass on the benefit
of extra margins to consumers by way of providing better complementary services and it
may not necessarily add extra value to complementary services. Nonetheless, in any
circumstances, even if a benefit in the form of improved complementary services may be
resulting from RPM, the same does not outweigh the harm caused to the market due to
significant reduction in intra-brand competition and softening of inter-brand competition,
leading to higher prices for the consumers.
Suo Motu Case No. 01 of 2019 37
Conclusion:
56. On the basis of the above analysis, the Commission concludes that MSIL not only
entered into an agreement with its dealers across India for the imposition of Discount
Control Policy amounting to RPM, but also monitored the same by appointing MSAs and
enforced the same through the imposition of penalties, which resulted in AAEC within
India, thereby committing contravention of the provisions of Section 3(4)(e) read with
Section 3(1) of the Act.
Penalty:
57. Under the provisions of Section 27(b) of the Act, the Commission is empowered to
impose upon an entity contravening the provisions of Section 3 and/or Section 4 of the
Act, penalty as it may deem fit, which shall not be more than ten percent of the average
of the turnover of the entity for the last three preceding financial years.
58. Having considered the nature of the infringing conduct and the post-pandemic phase of
recovery of automobile sector, the Commission takes a considerate view and deems it
appropriate to impose a penalty of ₹200 crores (Rupees Two Hundred Crores) only upon
MSIL, as against a maximum penalty permissible under the provisions of the Act, which
may extend upto ten percent of the average of the turnover of the entity for the last three
preceding financial years.
ORDER
59. The Commission, in terms of Section 27(a) of the Act, directs MSIL to cease and desist from indulging in RPM directly and/or indirectly, which has been found by the Commission in the present order to be in contravention of the provisions of Section 3(4)(e) of the Act.
60. Further, the Commission, under the provisions of Section 27(b) of the Act, directs MSIL to deposit the penalty of ₹200 crores (Rupees Two Hundred Crores Only) imposed upon it within a period of 60 days of receipt of the present order.
Suo Motu Case No. 01 of 2019 3861. It is made clear that all information contained in the present order has been used for the purposes of the Act in terms of the provisions of Section 57 thereof. However, the other information over which confidentiality has been granted by the DG shall continue to remain confidential for a period of three (3) years from the date of passing of the present order, as directed by the Commission vide order dated 11.11.2020.
62. As regards the confidentiality claims with respect to objections/ suggestions to the DG Report filed by MSIL, confidentiality is granted as prayed for, subject to the observations made in the preceding paragraph.
63. The Secretary is directed to forward a certified copy of the present order to MSIL through its counsel accordingly.
Sd/-
(Ashok Kumar Gupta) Chairperson Sd/-
(Sangeeta Verma) Member Sd/-
New Delhi (Bhagwant Singh Bishnoi)
Date: 23.08.2021 Member
Suo Motu Case No. 01 of 2019 39