JSW Paints likely to contest CCI's order on Asian Paints in NCLAT

This move by JSW Paints comes after CCI disposed off JSW Paints plea which stated that Asian Paints blocked its entry in the decorative paints segment

JSW Paints may challenge the Competition Commission of India’s (CCI’s) order in the National Company Law Appellate Tribunal, according to a source in the know.

The company also issued a statement that read: “We do not agree with the CCI order that Asian Paints has not abused its dominant position. We are currently reviewing the order and will take appropriate steps to protect the interests of our customers and dealers for a free and fair market.”

The company’s statement also said, “The CCI order reaffirms our view that paint dealers do not have any countervailing buying power and are at the mercy of Asian Paints and not vice versa as claimed by the latter (Asian Paints).”

This move by JSW Paints comes after CCI disposed of a plea by JSW Paints that stated that Asian Paints blocked its entry into the decorative paint segment. 

The antitrust body stated in its order dated September 8 that, “the commission is of the view that the balance is not tilted towards JSW Paints. Asian Paints has been able to demonstrate that some of its conduct or practices adopted qua the dealers was in furtherance of its terms of doing business with such dealers and not to keep JSW Paints away from the market”.

JSW Paints had gone to CCI in 2019 and alleged that immediately after the launch of its decorative paint business, Asian Paints began arm-twisting dealers who had agreed to stock and display decorative paints manufactured by JSW Paints.

The new entrant in paints said that Asian Paints had targeted dealers/distributors/retailers partnering JSW Paints, directing them to stop dealing, stopping supplies to these dealers, dropping service levels by delaying supplies and deliveries, asking dealers to remove displays of JSW Paints products from their retail shelves and dealer signboards, threatening dealers by not allowing them discretionary discounts, trips, and loyalty schemes.

JSW Paints had also told CCI that Asian Paints allegedly coerced enterprises that provided infrastructure facilities like warehouses to JSW Paints to not stock its products.

It cited that the enterprise that provided warehouse facility rescinded the contract with JSW Paints on account of Asian Paints requiring it to choose between Asian Paints and JSW Paints for a business relationship.

It also alleged that the rescission of contract led to delay in the launch of JSW’s products in Hubli, which resulted in loss of revenue, reputation, and credibility.

The antitrust body’s director-general (D-G) concluded in line with the order that Asian Paints enjoys a position of dominance in the decorative paints market on the basis of its highest market share for a substantial period of time.

The order also stated that, “The D-G found that even the allegation of dealers being under pressure from Asian Paints not to deal with JSW Paints is not substantiated as the percentage of dealers who discontinued their relationship with Asian Paints is much higher for Asian Paints in terms of new additions, and vice versa for JSW Paints.”

The D-G’s report also said according to the order only 15 of the 1,378 dealers (taking the higher estimate) came forward and levelled allegations against Asian Paints. Also, none of the 15 dealers submitted enough evidence to substantiate their allegations, so that contravention could be legally demonstrated.