Asian Paints Share Price in Focus as CCI Probes Over Alleged Market Abuse

India's decorative paints market is witnessing rising tensions as new players challenge the long-standing dominance of industry leaders. The Competition Commission of India (CCI) has taken a decisive step by initiating an investigation into Asian Paints Ltd, after Grasim Industries, through its subsidiary Birla Opus Paints, alleged that the market leader is misusing its position to suppress competition. This development could reshape the competitive dynamics of the paint sector.

Allegations of Anti-Competitive Tactics

Grasim Industries, a recent entrant in the decorative paints market, has raised serious concerns about the conduct of Asian Paints. It claims that Asian Paints has been offering exclusive incentives to dealers, including foreign trips and additional discounts, in exchange for sales exclusivity. These alleged incentives, according to Grasim, are structured to dissuade dealers from engaging with rival brands. Furthermore, dealers who choose to sell competing products reportedly face punitive actions such as reduced credit limits and elevated sales targets.

Birla Paints has also accused Asian Paints of influencing suppliers to restrict raw material access to new players. A particular instance highlighted was a vendor meet organised by Asian Paints in October 2023 at ITC Maratha, Mumbai, which saw the participation of over 150 top vendors. Grasim contends that such gatherings are being used to dissuade vendors from working with new market entrants like Birla Opus Paints.

CCI’s Response and Legal Process

The Competition Commission of India, in response to these claims, has directed its Director General to conduct a full-scale investigation. “The Commission directs the Director General (‘DG’) to cause an investigation to be made into the matter and submit an investigation report within a period of 90 days of the receipt of the present order. At this prima facie stage, the Commission, in light of the material available on record, finds no reason to hear the OP before passing the present order,” the CCI stated.

Following the preliminary review, the Commission has emphasised the neutrality of the process. “Nothing stated in the present order shall tantamount to final expression of opinion on the merits of the case and the DG shall conduct the investigation without being swayed in any manner whatsoever by the observations made herein,” it added.

Read More: Grasim Industries Approves ₹1,000 Crore Non-Convertible Debenture Issue!

CIME Data

According to data from the Centre for Monitoring Indian Economy (CMIE), Asian Paints held a dominant market share of 39.05% in FY23. It was followed by Berger Paints at 12.13%, while Kansai Nerolac Paints and Akzo Nobel India held under 10% each.

Conclusion

As new entrants like Birla Opus Paints intensify competition in the Indian paint sector, the CCI’s probe into Asian Paints marks a crucial moment for the industry. The outcome of this investigation could lead to more level playing fields for emerging brands and ensure that market leaders do not misuse their positions. With a 90-day timeline in place, all eyes are now on the findings of the Director General's report and its implications for future business conduct within the sector.

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