Companies

CCI to probe JSW Paints’ complaint against Asian Paints

Suresh P Iyengar Mumbai | Updated on January 16, 2020 Published on January 16, 2020

 

The Competition Commission of India (CCI) has ordered investigation against Asian Paints for using its dominant position to allegedly prevent JSW Paints from entering the market. In the interim order, it has directed the Director General to investigate and submit a report within 60 days.

Since last January, JSW Paints has approached several dealers in Bengaluru, Hubli, Kochi, Kozhikode, Hyderabad and Chennai explaining its proposed pricing, benefits to dealers in terms of tinting and delivering the paints. It had also offered dealers margins and incentives. In order to confirm dealer's interest, JSW Paints had asked them to pay ₹1 lakh as advance to be set off against the launch orders.

JSW Paints in its complaint with CCI said immediately after its launch, Asian Paints targeted dealers/distributors/retailers partnering JSW Paints, directing them to stop the deal with the company and thus, curtailed the supplies.

It also asked dealers to remove display of JSW Paints products and threatened dealers to stop discretionary discounts.

Following this, many dealers stopped dealing with JSW Paints, despite depositing initial payment ₹1 lakh, it said.

JSW Paints alleged that it was denied access to dealers, which is essential for operating in the market, due to punitive action taken by Asian Paints against the dealers.

The company faced problems in Karnataka, Tamil Nadu and Telangana. With plans to launch its products in Andhra Pradesh, Goa, Maharashtra, and Gujarat soon, JSW Paints believe that Asian Paints would take coercive action against the dealers for denying dealers access to the company and so has sought intervention of CCI.

For the fear of losing Asian Paints' dealership, certain dealers in Karnataka decided to discontinue purchase of JSW Paint’s products. In order to get Asian Paints supply, a dealer gave a written assurance that he would never sell JSW Paint’s products, said the company in its complaint.

In Chennai, many dealers were directed by Asian Paints not to attend JSW Paint’s retailers launch meet. At least 12 dealers did not place any order with JSW Paints fearing reprisal from Asian Paints.

In 2015-16, JSW Paints said when Nippon entered the decorative paints market in Chennai, Asian Paints took similar action against the dealers who entered into commercial relationship with Nippon.

CCI has taken into account the top four operators – Asian Paints, Berger Paints, Kansai Nerolac and Akzo Nobel – who enjoy about 80 per cent market share, with Asian Paints enjoying a dominant position for years.

Published on January 16, 2020
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