No abuse of dominance by Asian Paints: CCI

Case Details: JSW Paints (P.) Ltd. v. Asian Paints Ltd. - [2022] 142 taxmann.com 210 (CCI)

Judiciary and Counsel Details

• • Ashok Kumar Gupta, Chairperson, Sangeeta Verma & Bhagwant Singh Bishnoi, Member
  • Gopal Jain, Neeraj Kishan Kaul, Rajshekhar Rao, Sr. Advs. A.S. Sundaresan, Ms Ami Parikh, Sumit Midha, Authorised Representatives
  • Vivek Agarwal, Ms Aayushi Sharma, Divyansh Prasad, Vaibhav Gaggar, Sumit Garg, Nipun Bansal, Ketan Sarraf, Akash Chatterjee, Ms Kokila Kumar, Harman Singh Sandhu & Ms Nikita Dwivedi, Advs. for the Appearing Parties.

Facts of the Case

In the instant case, the information was filed by JSW Paints (P.) Ltd (the “Informant) u/s 19(1)(a) against Asian Paints Limited alleging the contravention of sections 3(4) and 4 of the Competition Act, 2002.

JSW Paints alleged that, immediately after the launch of its decorative paints, Asian Paints targeted dealers/distributors/retailers partnering with JSW Paints. It directed them to stop dealing with JSW Paints and threatened them to stop supplies to these dealers.

Further, it also asked dealers to remove display of JSW Paints products from their retail shelves and threatened of not to allow them discretionary discounts, among others.

Further, Asian Paints was alleged to hinder the entry of JSW Paints by virtue of its dominance in the market for the manufacture and sale of decorative paints by the organised sector in India, in contravention of provisions of Section 4(2)(c) of the Act. Thus, the conduct of Asian Paints was aimed at preventing JSW Paints from establishing its presence in the said market

CCI Held

The CCI noted that the conduct of Asian Paints was a case of enforcing an exclusive supply agreement and refusal to deal as provided in Section 3(4) of the Act. Thus, the said conduct caused an appreciable adverse effect on competition by creating barriers to entry, driving existing competitors out of the market and foreclosure of competition by hindering the entry of JSW Paints into the market.

The CCI observed that the Asian Paints prima facie appeared to enjoy a dominant position in the relevant market for “manufacture and sale of decorative paints by the organised sector in India”.

Further, with respect to the alleged contravention of Section 3(4) of the Act, the CCI observed that the restraints imposed by Asian Paints appeared to be in the nature of an exclusive supply agreement and refusal to deal. Accordingly, the CCI directed the DG to cause an investigation to be made into the matter under the provisions of Section 26(1) of the Act.

The CCI, on the basis of DG findings, held that there has to be evidence that, on the balance of probabilities, would point towards a strong entrenched player using tactics to oust a smaller player or even a new entrant to the market (regardless of its size or inherent advantages) by either incentivizing or coercing downstream players to boycott or not deal with the new players.

“In the present case, the balance was not tilted towards JSW Paints. Asian Paints was able to demonstrate that some of its conduct or practices adopted qua the dealers were in furtherance of its terms of doing business with such dealers and not to keep JSW Paints away from the market. “

In view of the above, the allegations of enforcing an exclusive supply agreement and refusal to deal against the Asian Paints were to be dismissed.