Asian Paints may face CCI probe for alleged market dominance abuse

The complaint alleged that Asian Paints pressured its network of dealers against doing business with Grasim's Birla Opus

Based on prima facie information, the Competition Commission of India (CCI) is likely to order an investigation into Asian Paints’ alleged abuse of market dominance. It could soon issue a formal order directing the probe to the director general – investigations, according to people in the know.

 

The antitrust watchdog had received a complaint from Birla Opus, part of the Aditya Birla group, accusing Asian Paints, which has a market share of roughly 53 per cent in the decorative paints segment, of anti??'competitive conduct and exclusionary tactics. 

 

The complaint had alleged that Asian Paints pressured its network of dealers not to do business with Grasim’s Birla Opus. Grasim is a flagship company of the Aditya Birla group. It further claimed that Asian Paints put pressure on raw material suppliers to either deny supplies or do price-discrimination against Birla Opus.

 

This is not the first time that the CCI has been asked to scrutinise Asian Paints. In 2019, JSW Paints had filed a similar complaint, alleging that after its entry into the decorative paints market, Asian Paints started arm-twisting the dealers who had agreed to stock and display the newcomer’s decorative paints. 

 

However, the watchdog had disposed of the JSW Paints plea at the time, saying: “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.”

 

The sources said the complaint made by JSW Paints concerned a much wider market where abuse of dominance could not be established, but the latest case is regarding specific markets and products.

 

Details of Birla Opus’ complaint would be known upon the issuance of a formal CCI order.

 

In a recent earnings call, Grasim Industries Managing Director (MD) Himanshu Kapania had told investors that in less than six months of pan-Indian operations, Birla Opus had become India’s number-three decorative paints brand, based on internal estimates. 

 

On the other hand, Asian Paints MD & Chief Executive Officer Amit Syngle told investors after the company’s January-March earnings that a combination of market slowdown and increased competition — from both existing and newer players — had been a double whammy for Asian Paints.