Asian Paints is reviewing an order passed by fair trade regulator Competition Commission of India (CCI), which had ordered an inquiry against India’s leading paint manufacturer for alleged abuse of its dominant position in the market. The company has said that it plans to take appropriate legal recourse.
Stating that it would cooperate with the Competition Commission of India (CCI) in the investigation over allegations of exclusionary practices, Asian Paints said in a late night regulatory filing on Thursday, “The company is currently reviewing the order and will take appropriate legal recourse. We remain committed to fully cooperating with the CCI during the course of the investigation.”
Earlier this week, the CCI had ordered an inquiry against the company for allegedly abusing its market dominance for manufacturing and sales of decorative paint, following complaints filed by Aditya Birla group firm Grasim Industries.
Grasim, a new entrant in India’s paint industry under the brand Birla Opus, had accused Asian Paints of engaging in exclusionary practices aimed at stifling its entry and growth in the decorative paint segment.
“The Commission is of the opinion that a prima facie case of contravention of the provisions of section 4(2)(a)(i), 4(2)(c) and 4(2)(d) of the Act by the OP (Asian Paints) is made out in the present matter,” the CCI said in its order, directing its probe unit Director General to conduct an investigation into the allegations and submit a preliminary report within a period of 90 days. Section 4 of the Competition Act, 2002 prohibits abuse of dominant position.
The CCI had observed that Asian Paints restrained its dealers from dealing with Grasim’s Birla Opus by enforcing exclusivity upon them, which is imposition of unfair conditions upon them and amounts to exploitative conduct. The CCI, however, clarified that the observations made were not a final view on the merits of the case. In the last 5-6 years, several new players have entered the paint market, including Pidilite with Haisha Paints, Birla Opus and JSW Paints. Apart from this, pipes and fittings manufacturer Astral has acquired Gem Paints and JK Cements has acquired Acro Paints to mark its foray into the paint business. However, Asian Paints still controls over 50 per cent of the decorative paint market in India, followed by Berger Paints and Kansai Nerolac. These three companies put together control over three-fourths of the market.
Follow us
