CCI orders investigation against Asian Paints for alleged market abuse charges

The Competition Commission of India (CCI) ordered an investigation against Asian Paints on Tuesday, July 1, for allegedly abusing its position to dominate the market for manufacturing and sale of decorative paints.

The complaint was filed by Grasim Industries, which has recently entered the segment. Aditya Birla Group firm Grasim had entered the decorative paints segment under the 'Birla Opus Paints' brand in February last year.

According to a July 1 order from CCI, Grasim has allegedly accused Asian Paints of engaging in exclusionary practices aimed at stifling its entry and growth in the Indian decorative paints segment.

"The Commission is of the opinion that a prima facie case of contravention of the provisions of section 4(2)(a)(i), 4(2)(c) and 4(2)(d) of the Act by the OP (Asian Paints) is made out in the present matter," CCI said in the order.

Section 4 of the Competition Act, 2002, prohibits abuse of dominant position.

The competition regulator observed that OP (Asian Paints) by way of restraining its dealers from dealing with the OP's competitors, like the informant (Grasim Industries Ltd), by enforcing exclusivity upon such dealers is imposing unfair conditions upon them, which is found to be in the nature of exploitative conduct.

Further, by restraining suppliers of essential raw materials from providing goods and services to the OP's competitors, like the informant, as well as by coercing landlords, C&F agents and transporters to refrain from engaging with competitors like Grasim, Asian Paints seems to be prima facie creating barriers to new entrants in the market as well as partially foreclosing competition in the market, it said.

Thus, the conduct of Asian Paints seems to be prima facie causing an appreciable adverse effect on competition in India, the regulator added.

The order clarified that the observations made were not a final view on the case merits and directed the DG to conduct the probe without being swayed in any manner whatsoever by the observations made herein.

Shares of Asian Paints on Tuesday were one of the top gainers on the NIFTY50 index. The stock gained 1.24% to close at ₹2,370 apiece on NSE.

Asian Paints had reported a net profit of ₹692 crore for the January-March quarter, marking a decline of 45% from the ₹1,257 crore profit logged in the same period last year.

The company's revenue declined 4% to ₹8,329.59 crore in Q4 as against ₹8,701 crore in the year-ago period.