Companies

CCI hauls Grasim for discretionary VSF pricing

Suresh P Iyengar Mumbai | Updated on August 12, 2021

Told to desist from misusing dominant position

The Competition Commission of India has directed Grasim Industries, an Aditya Birla Group company, to desist from making discretionary pricing of Viscose Staple Fibre by misusing its dominant position in the market.

In the order, the competition watchdog said that Grasim has abused its dominant position in the market for the supply of VSF to spinners in India by charging discriminatory prices to its customers, denying market access and imposing supplementary obligations upon its customers in violation of the relevant law.

Directing Grasim to cease and desist from indulging in such practices, it did not levy any fresh fine as it has already imposed a ₹302 crore penalty last March in a similar case.

Reacting to the CCI order, Grasim said it believes that on merits it has sufficient grounds for an appeal against the order.

VSF manufactured by Grasim is an indispensable input for producing both 100 per cent VSF yarn or blended yarn. VSF imported are not an economically viable alternative for domestic spinners. Grasim has been discriminating against domestic category spinners by way of discounts distorting competition among yarn producers. In the latest instance, Grasim withdrew all discounts and credit, making VSF supply costlier and rendering VSF yarn manufacturing uncompetitive.

By offering VSF at prices that are not economically viable for the buyers to continue with its activity of spinning VSF yarn, Grasim has denied the buyer access to an indispensable input in order to exclude him from the business. By way of its conduct, the dominant entity prevents the requesting or terminated party from gaining access to an input. As a result, spinners are either driven out of the market, marginalised, denied access to market or prevented from entering the market, the order said.

Terming the company’s argument that refusal to supply VSF to a buyer owing to a commercial dispute cannot be tested under Competition Law, CCI said it is devoid of merit and is misconceived. The commission considers such conduct unfair and discriminatory in violation of competition law, the order said.

On Grasim seeking details of production and exports from Indian spinners for sale of VSF, CCI said providing discount based on consumption is nothing but an attempt by a dominant undertaking to control the entire market in its favour by putting conditions which not only put supplementary obligations upon small spinning companies but also interfere with their freedom of trade. Grasim has asserted its market power upon the small players and has acted in an abusive manner, it said.

Published on August 12, 2021

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