CCI to investigate Tasmac for 'abuse' of dominant market position

Fair trade regulator CCI has ordered an investigation against state-owned liquor retailer Tamil Nadu State Marketing Corporation Ltd (TASMAC) over allegations that it is restricting competition in the state's beer market by favouring select brands.

TASMAC is a Tamil Nadu government's wholly-owned company registered under the Companies Act.

In an order passed on Tuesday, the Competition Commission of India (CCI) directed the Director General (DG) to complete and submit the investigation report within 60 days.

The order came after an individual filed a complaint alleging that TASMAC has been purchasing and selling only a few beer brands, while limiting access to other brands in the market and discouraging competition in business.

The complainant argued that this practice violates Section 4 of the Competition Act, 2002, which prohibits abuse of dominant position.

According to the complainant, TASMAC, which has exclusive rights to sell alcoholic beverages in Tamil Nadu through its 5,000-plus retail outlets, has allegedly formed a nexus with specific breweries, restricting consumer choice and impeding fair competition, the order said.

The competition watchdog noted that TASMAC holds a monopoly in the sale of liquor in Tamil Nadu and qualifies as an enterprise under the Competition Act since it is engaged in economic activity.

However, TASMAC, in its defence, said that its procurement process is automated and based on a weighted average sales calculation method, the order stated.

The orders for beer manufacturers are generated through a software at the beginning of each month, considering past sales and existing stock levels. The corporation argued that sales of a particular brand depend on consumer preference and manufacturers' ability to meet demand, it added.

"The Commission is of the prima facie view that TASMAC appears to be abusing its dominant position by limiting market access to certain brands of beer in the state of Tamil Nadu in contravention of Section 4(2)(c) of the Act.

"...there appears to be substance in the allegations levelled by the informant (individual) and the same merits investigation by the Director General (DG). Accordingly, the Commission directs the DG to cause an investigation to be made into the matter under the provisions of section 26(1) of the Act," CCI said.

CCI also made it clear that nothing in this order will "tantamount to a final expression of opinion on the merits of the case, and the DG shall conduct the investigation without being swayed in any manner, whatsoever, by the observations made herein".

Earlier this month, the Enforcement Directorate conducted searches at multiple locations in Tamil Nadu as part of a money laundering probe linked to alleged irregularities in the TASMAC, including the purported role of its minister Senthil Balaji.

Balaji, the minister for electricity, also has TASMAC under his charge.