JSW Paints, which has recently entered into the decorative paints business, filed a complaint claiming that Asian Paints was abusing its dominant position in the market.
A.S. Sundaresan, the Joint MD & CEO of JSW Paints made a statement claiming that the CCI has confirmed that Asian Paints is in a dominant position in the decorative paints market following an investigation based on their complaint.
This move by JSW Paints came after CCI disposed of a plea by JSW Paints against Asian Paint stating that it blocked its entry into the decorative paint segment.
The antitrust body stated in its order that the commission believes that there is no merit in the complaint filed by JSW Paints aa Asian Paint has been able to demonstrate that its conduct or practices adopted by the dealers are in accordance with its terms of doing business with such dealers and not with the motive of keeping JSW Paints away from the market.
The Bigger Picture
JSW Paints had gone to CCI in 2019 and alleged that immediately after the launch of its decorative paint business, Asian Paints began persuading dealers who had agreed to stock and display decorative paints manufactured by JSW Paints against it.
The new entrant in the paints business said that Asian Paints had targeted dealers, distributors as well as retailers partnering with JSW Paints, and pressurized them to stop the dealings, providing services as well as stopping supplies to JSW Paints. It claimed that Asian Paints also persuaded them to remove JSW’s products from their retail shelves and dealer signboards, threatening dealers by not allowing them discretionary discounts, trips, and loyalty schemes.
JSW Paints also informed CCI that Asian Paint allegedly coerced enterprises to stop the services provided to JSW Paints.
It cited that an enterprise-providing warehouse facility rescinded the contract with JSW Paints as Asian Paint required it to choose between Asian Paints and JSW Paints for the business relationship. It also alleged that the rescission of the contract led to a delay in the launch of JSW’s products in Hubli, resulting in a huge loss of revenue, reputation, as well as credibility.
Further, the complainant had stated that they were planning to launch its products in the southern and western parts of India. However, they were denied market access in these states and faced the same resistance in other regions due to the coercive actions taken by the rival Asian Paints against the dealers.
Henceforth, in 2020, a probe was ordered by the anti-trust regulator after the complaint was filed by JSW Paints.
The order stated that the Director General found that the allegation of dealers being under pressure from Asian Paint not to deal with JSW Paints was not substantiated because the percentage of dealers who discontinued their relationship with Asian Paints was much higher for Asian Paints in terms of new additions, but it was opposite in the case of JSW Paints.
As per the allegations of attempts by Asian Paint to pressurize the dealers to return the JSW Paints tinting machine, CCI’s DG could not find incriminating evidence from any dealer that could support the allegations against Asian Paint.
However, Asian Paints stated that its actions were based on objective criteria and uniformly applicable practices to protect its business interest.
Final Judgement
The regulator concluded that JSW Paints was unable to demonstrate to the satisfaction of the commission and hence, the allegations that it made against Asian Paints could not be substantiated to form a prima facie view in the matter. Hence, CCI disposed of the complaint filed by JSW Paints.
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