During an investigation launched by the Director-General on the direction of CCI, it was found that 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 was permitted by MSIL. If found to be violating the policy, the dealers were 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., and stopping of supplies.
It was further found that to enforce its Discount Control Policy, MSIL used to appoint Mystery Shopping Agencies (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, the penalty would be imposed on the dealership and its employees, accompanied in some cases, by the threat of stopping supplies.
CCI concluded that MSIL not only entered into an agreement with its dealers across
The practice of setting a maximum discount which the dealers can offer to the consumers effectively mean setting a minimum price for the products i.e. resale price maintenance which is prohibited under competition law if it has an appreciable adverse effect on competition in
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