Asian Paints CCI probe: The Competition Commission of India (CCI) has ordered a formal inquiry into the ‘Abuse of Dominance’ case against Asian Paints on 1 July. This action has been taken after the complaint of Birla Opus Paints of Birla Group. It alleges that Asian Paints tried to suppress the competition by misusing their strong positions in the market.
What are the allegations on Asian Paints?
Birla Paints alleges that Asian Paints are adding restrictive conditions to their distributors with their distributors that they cannot sell products of Birla Ops Paints.
The complaint also states that the dealers who are doing exclusive deals with Asian Paints are being provided with special discounts, sponsorship of foreign trips. At the same time, the dealers who are selling products of both companies are targeting Asian Paints. Such as credits reduce, increase target and give low consumer leads.
Cited an incident in October 2023
Birla Paints has also mentioned a special incident. According to this, Asian Paints held a vendor meat at ITC Maratha Hotel in Mumbai in October 2023. It included more than 150 vendors. In this program, CEO of Asian Paints allegedly stated that whoever supplies the vendor Birla Paints will be reduced to the business part with Asian Paints. Not only this, they were also instructed to supply Birla Paints at high prices only.
CCI’s initial opinion
CCI says that based on the evidence presented, it appears that Asian Paints were restricting the supply of some essential services and resources. This obstructed the new paint unit of Birla Group to be installed in the market. Now the formal inquiry of the case will be done by the CCI Director General of Investigation (DGI). It has to be completed within 90 days.
CCI has taken action before
India’s competition law takes action against companies in all such cases where competitors are prevented by misusing monopoly or market dominance. CCI has earlier taken action against restrictive contracts in cases like Google and Oyo Rooms.
Asian Paints leads in market share
According to Center for Monitoring Indian Economy (CMIE), Asian Paints stake in the Indian market in FY 2022-23 were 39.05%, which is the highest. The second number is Berger Paints (12.13%) and then Kansai Nerolac and Exo Nobel India, which holds less than 10%.
The condition of shares of both companies
On July 1, the Asian Paints shares climbed 1.17% to close at ₹ 2,368.85. At the same time, Grasim Industries, who operated the Birla OPUS Paints, closed 0.43% to close at ₹ 2,859.30. The iconic brokerage firm Morgan Stanley has recently given Grasim ‘overweight’ rating and has also increased the target price of the share.
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