Investigation commissioned against Asian Paints following complaint from Birla Corporation
The Competition Commission of India (CCI) has launched a comprehensive investigation into Asian Paints, one of the leading players in India's decorative paints market, following allegations of abuse of dominant position and anti-competitive practices. The investigation was prompted by a complaint filed by Grasim Industries, the Aditya Birla Group's paints division, Birla Opus Paints.
The CCI's preliminary findings suggest that Asian Paints may be engaging in practices that are causing an appreciable adverse effect on competition in India. These practices include creating barriers for new entrants, partially foreclosing competition, imposing unfair conditions on dealers, and threatening suppliers. The CCI has also identified prima facie violations of the Competition Act, including unfair trade practices, denial of market access, and the imposition of supplementary obligations on dealers.
The CCI's order comes as a response to an interlocutory application filed by Birla Opus in December 2024, seeking urgent intervention due to the alleged anti-competitive conduct of Asian Paints. M M Sharma, head of competition law at Vaish Associates Advocates, stated that the CCI order is "fairly reasoned" and that this case involves a dominant player attempting to enforce exclusivity and exclude rivals from the market through unfair means.
The CCI has directed its Director General (DG) to conduct a full-scale investigation and submit a report within 90 days. The investigation will delve deeper into sections of the Competition Act that relate to abuse of dominant position, including unfair practices and refusal to deal. Asian Paints has expressed its commitment to cooperate with the investigation and is reviewing the order with the intent to take appropriate legal recourse.
If the abuse of dominance is confirmed, the CCI may impose penalties, which can include heavy fines based on the company's turnover. The CCI can also order the cessation or modification of the unfair practices, and Asian Paints may be required to provide unhindered market access to competitors like Grasim. The ruling could lead to broader changes in how dominant firms operate within the decorative paints market to ensure fair competition.
The outcome of the CCI's investigation could potentially have significant implications for the market structure and competitive landscape of the decorative paints industry in India. Experts predict that the probe may take longer due to the time-consuming nature of evidence collection and extensive cross-examination. The CCI's investigation into Asian Paints also highlights the importance of maintaining a level playing field for all players in the decorative paints market, particularly for new entrants and smaller companies.
In summary, the CCI’s ordered probe could result in significant regulatory action against Asian Paints if the allegations are substantiated, aimed at restoring competitive parity in India’s decorative paints industry. The investigation is being closely monitored by experts and stakeholders in the industry, and the outcome could shape the competitive dynamics of the market for years to come.
[1] Business Standard, "CCI initiates detailed probe into Asian Paints for alleged abuse of dominant position," 1st March 2025. [2] Livemint, "Asian Paints faces CCI probe over alleged abuse of dominant position," 1st March 2025. [3] The Economic Times, "CCI orders probe into Asian Paints for alleged abuse of dominant position," 1st March 2025.
The CCI's investigation into Asian Paints, a prominent business in India's decorative paints market, could potentially result in a shift in the competition dynamics of the sector, given the allegations of abuse of dominant position and anti-competitive practices. This probe, prompted by the complaint from Birla Opus Paints, Grasim Industries' paints division, may lead to significant regulatory action if the allegations are substantiated.
The findings from the CCI's investigation, including unfair trade practices, denial of market access, and the imposition of supplementary obligations on dealers, could have far-reaching effects on India's finance market, particularly in the decorative paints sector, as companies will be encouraged to follow fair competition practices.
