CCI probes Asian Paints for alleged unfair business practices
16 Jan 2020
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The Competition Commission of India (CCI) has launched an investigation into allegations that Asian Paints threatened punitive action against paint dealers dealing in other paint brands.
The anti-trust regulator’s order comes on a complaint filed by JSW Paints, which alleged that Asian Paints threatened various dealers in Karnataka, Telangana and Tamil Nadu with punitive action for dealing in JSW Paints.
JSW Paints alleged that the dealers faced punitive action at the hands of Asian Paints if they continued to deal with JSW Paints.
JSW Paints alleged that Asian Paints threatened the dealers to discontinue their supplies, and disallowed discretionary discounts, among others.
These restraints appear to be in the nature of exclusive supply agreement and refusal to deal, JSW Paints alleged.
The regulator noted that denial of market access is a "severe form of abuse of dominant position".
The CCI has ordered investigation on the alleged blocking of market access to JSW Paints by Asian Paints, which enjoys dominance in the market in the manufacture and sale of decorative paints.
"The Commission is of the view that evidence provided by JSW Paints is prima-facie sufficient to indicate that Asian Paints has denied access to the distribution channels in the relevant market to JSW Paints by threatening and coercing such dealers through various means," the regulator said.
It added that Asian Paints, "prima-facie", appears to be in contravention of provisions of the Competition Act.
Besides, JSW Paints stated that Asian Paints has always maintained the highest market share and there have been no new players in the relevant market in the past 10 years.
"In the facts of the present case, the Commission notes that the alleged conduct of Asian Paints of threatening and pressurising dealers as highlighted by JSW Paints prima-facie brings out that Asian Paints has attempted to prevent JSW Paints in establishing a presence in the relevant market," CCI said.
It also said, "The alleged restrictions on dealers not to deal with JSW Paints or any other company manufacturing paints can create barriers for suppliers of paints, who compete with these suppliers besides not allowing the benefit of better prices to the consumers."
CCI, in its order passed on Wednesday, directed the director-general "to complete the investigation and submit the investigation report within a period of 60 days from the receipt of this order".
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