JSW Paints vs. Asian Paints: Appeal filed before NCLAT challenging CCI order

JSW Paints has filed an appeal before the National Company Law Appellate Tribunal (NCLAT) against the September 8 final order passed by the Competition Commission of India (CCI) on its information alleging abuse of dominant position by Asian Paints. 

The appeal is likely to be taken up for hearing by NCLAT during this week, it is learnt. 

Appeal   

In the appeal before NCLAT, JSW Paints pointed the flawed reasoning of the CCI and contended that comparison of net dealers was wrong as Asian Paints is working in a saturated market where it already has over 25,000 dealers whereas JSW paints was entering the market. It was also argued that CCI failed to scrutinise the merits of the case and has also failed to take into consideration all the relevant factual and legal submissions. While passing the impugned order, the CCI violated principles of natural justice by denying a fair opportunity to cross-examine to JSW Paints of six officials of Asian Paints and thereby turned a blind eye to the contradictory and inculpatory statements of such officials.  

Complaint before CCI

It maybe recalled that JSW Paints had in its information before CCI alleged that Asian Paints pressurised its dealers who had agreed to stock and display JSW’s decorative paints. 

It was alleged that representative of Asian Paints started threatening dealers by way of stoppage in supply of orders and by reducing their credit limits and incentives otherwise offered. Describing Asian Paints as “dominant entity” and the dealers as “mom-and-pop” type of players, JSW Paints alleged that several dealers limited or completely stopped dealing in its products. 

CCI Order

CCI had on September 8 passed final order in the matter after detailed investigation and closed the matter finding no case of contravention of the provisions of the Competition Act, 2002. Though CCI found Asian Paints to be dominant in the market for manufacture and sale of decorative paints by the organised sector, it did not find any abuse of market power.

While closing the case, CCI held that the allegation regarding denial of market access pertaining to restricting access to the distribution network (dealers) was not established as JSW Paints added more net dealers in FY 2019-20 and FY 2020-21 than Asian Paints. The allegation about denial of market access pertaining to restricting access to infrastructure facilities (warehouse) was also not found to be established as investigation could not establish any conclusive proof that Asian Paints was behind termination of lease. 

“The Commission is of the view that there appears to have existed some inter se disputes..…., which cannot be attributable to Asian Paints in the absence of any concrete evidence. Thus, the allegation of denial of infrastructural facilities is not supported by evidence on record. Accordingly, the Commission is of the view that no case of contravention of provisions of Section 4 of the Act is made out in the facts of the present case due to lack of evidence on abusive conduct of Asian Paints”, noted CCI in its order while closing the case.

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