Asian Paints shares in focus after CCI orders probe over alleged abuse of dominant position
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Shares of Asian Paints will be in focus on Wednesday after the Competition Commission of India (CCI) ordered an investigation into the company following a complaint by Aditya Birla Group's Grasim Industries , alleging abuse of dominant market position."The Commission directs the Director General ('DG') to cause an investigation to be made into the matter and submit an investigation report within a period of 90 days of the receipt of the present order. At this prima facie stage, the Commission, in light of the material available on record, finds no reason to hear the OP before passing the present order," said the regulator.The order clarified that 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.Responding to the order of CCI, Asian Paints said that it is currently reviewing the order and will take appropriate legal recourse. "The Company remains committed to fully cooperating with the CCI during the course of the investigation. You are requested to take the above information on record," said the company through stock exchange filing.Grasim has alleged that Asian Paints was abusing its dominant market position by offering discounts and incentives such as foreign travel to dealers in exchange for exclusivity. Asian Paints also increased sales targets for dealers who dealt with Birla products, Birla's company alleged. The firm also accused Asian Paints of "coercing" landlords and transporters to refrain from engaging with Birla's company.The CCI's initial review shows Asian Paints has been "imposing unfair conditions upon them (dealers), which is found to be in the nature of exploitative conduct," the watchdog said.According to the order, Asian Paints restraining suppliers of essential raw materials from providing goods and services to the competitors like Grasim, 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.In India's Rs 80,000 crore to 90,000 crore paint market, Asian Paints remains country's largest paint manufacturer and holds 53% of the country's installed paint production capacity. It has a vast distribution network of over 74,000 dealers across 1.6 lakh touchpoints. However, the giant has lost some of its dominance after Birla Opus launched in February 2024 and grew rapidly to garner a near 7% market share by March this year, Elara Capital data shows.In September 2022, CCI dismissed a complaint filed by JSW Paints alleging unfair business practices against Asian Paints with regard to the latter misusing its dominant position and further denying access to the market. JSW Paints had alleged that after they launched their decorative paints segment, Asian Paints began to pressurise and target the dealers who had agreed to stock and display their decorative paints manufactured by the company.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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