Asian Paints fell 0.46% to Rs 1833.35 after the Competition Commission of India ordered a probe against the company for unfair business practices.
The Competition Commission of India (CCI) has ordered a probe against Asian Paints allegedly hindering the entry of JSW Paints by virtue of its dominance in the market for manufacture and sale of decorative paints.
The order came after JSW Paints filed a complaint alleging that Asian Paints threatened various dealers in Karnataka, Telangana and Tamil Nadu from dealing with JSW Paints.
CCI 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.
JSW Paints, in its complaint, alleged that the dealers faced punitive action at the hands of Asian Paints if they continued to deal with JSW Paints. It was also alleged that Asian Paints threatened the dealers to discontinue their supplies, and disallowed discretionary discounts, among others.
In a regulatory filing made after market hours yesterday, Asian Paints said CCI has passed a prima facie order dated 14 January 2020, directing the Director General to cause an investigation against the company, under the provisions of the Competition Act, 2002, basis information received from JSW Paints.
The company is currently examining the order and will take appropriate legal recourse and will extend full co-operation to CCI in the matter, it said.
Asian Paints is engaged in the business of manufacturing, selling and distribution of paints, coatings, products related to home decor, bath fittings and providing of related services.
The paint maker's consolidated net profit rose 67.5% to Rs 823.41 crore on 9.43% rise in net sales to Rs 5,050.66 crore in Q2 September 2019 over Q2 September 2018.
The company will declare it third quarter earnings on 22 January 2020.
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