The action came after Birla Opus Paints complained to CCI that Asian Paints was placing restrictive conditions on vendors and distributors.
The Competition Commission of India (CCI) has ordered its director general (DG) to investigate allegations of abuse of market dominance by paint maker Asian Paints. This investigation has been ordered following compliant raised by Grasim Industries, which is a new entrant into the paint market through Birla Opus Paints, an official order dated July 1 showed. In the complaint, Birla Opus Paints has also accused Asian Paints was putting restrictive clauses with its distributors discouraging them from selling products of Birla Paints.
The informant company also added that some of the dealers who are entering into exclusive arrangements with Asian Paints are being specially rewarded by offering special discounts, sponsoring foreign trips etc. On the other hand, dealers who are selling Birla Paints along with Asian Paints are being targeted by Asian Paints through reducing credit limit, enhancing sales targets and reducing consumer leads.
“From the aforesaid material placed on record by the Informant, it appears that the OP is restraining third parties like suppliers of essential raw materials, warehousing landlords, C&F Agents and Transporters, from engaging with the Informant, which prima facie leads to input foreclosure for the Informant amounting to denial of market access to competitors like the Informant, in contravention of the provisions of Section 4(2)(c) of the Act,”
CCI quorum lead by its chair Ravneet Kaur said in the order dated July 1.
According to Centre for Monitoring Indian economy (CMIE) data, Asian Paints was the largest paint company in the country with a market share of 39.05% in FY23. Berger Paints was distant second with market share of 12.13% while Kansai Nerolac Paints and Akzo Nobel India were third and fourth with market share less than 10% each, respectively.
Birla Paints also alleged Asian Paints was threatening the suppliers too from providing raw materials to Birla Paints. In specific, Birla Paints had pointed out a specific incident that happened in October 2023 when Asian Paints conducted a vendor meet at ITC Maratha Bombay, which was attended by over 150 top vendors of Asian Paints.
“During the event, the Chief Executive Officer of the OP communicated to all the vendors (including MNCs and PSUs) that any vendor supplying raw material to the Informant(Birla Paints) would face a reduction in business share with the OP(Asian Paints). Moreover, the vendors were also instructed that if they supply to the Informant, they must charge a higher rate than what they get from the OP,”
the order said.
India’s competition rules prohibit companies with concentrated market shares from indulging in practices that stifle competition. In the past, the commission had cracked down on several cases including that of Google and Oyo Rooms who imposed restrictive clauses on sellers and distributors.
Source: Moneycontrol
