CCI orders probe against Asian Paints over market dominance abuse: Key allegations by Birla Paints

The company has been accused of offering additional or extra discounts or incentives like foreign travel, etc., to its dealers in exchange for exclusivity, which is arbitrary in nature and not linked to any uniform policy or based on performance or sales of the dealer.

The company has also been accused of using unfair tactics to stop dealers from stocking Birla Paints. These include threatening to cut credit limits, increasing sales targets, reducing service levels, taking away dealer benefits like foreign trips, cutting customer leads, ending ties with institutional clients, delaying orders, offering fewer products, and opening rival dealerships nearby.

Birla Paints has also accused Asian Paints of directing its dealers to return, or not use or install, the tinting machines supplied by the company. The company has also been accused of restraining third parties, including suppliers of essential raw materials, from providing goods and services to Birla Paints; and coercing landlords, clearing and forwarding agents, and transporters to refrain from engaging with the company, thereby restricting logistics and transportation of goods.

Birla Paints has alleged that Asian Paints is violating Section 4 of the Competition Act by imposing unfair and discriminatory terms on dealers to block them from working with Birla, restricting the use of its advanced tinting machines, denying market access to rivals through input foreclosure, and forcing extra conditions on dealers by linking incentives to non-performance-related factors.

CCI in its 16-page order notes that it appears that the opposite party, OP, (Asian Paints) is restraining third parties like suppliers of essential raw materials, warehousing landlords, C&F Agents, and transporters, from engaging with Birla Paints, which prima facie leads to input foreclosure for it, amounting to denial of market access to competitors.

Birla Paints has also alleged that it was subjected to a "fake smear campaign" by Asian Paints in Srinagar in July 2024 to malign its image in the market, giving details of the alleged incident, claiming confidentiality upon the details. "In regard to such alleged incident, an FIR is presently pending, and as such, no action from the commission is presently required," says the order.

Birla Paint also alleged that on October 27, 2023, Asian Paints conducted a vendor meet ‘Rock On’ at ITC Maratha, Mumbai, which was attended by approximately 150 vendors. At the event, its chief executive officer allegedly said that "any vendor supplying raw material to the Informant (Birla) would face a reduction in business share with the OP (Asian Paints)". Moreover, the company alleged that vendors were also instructed that if they supplied to Birla, they must charge a "higher rate" than what they get from Asian Paints.