I. INTRODUCTION
II. ABUSE OF DOMINANT POSITION UNDER SECTION 4
A. Relevant Market
For the purposes of assessing abuse of dominance, the CCI determined the relevant market to be the "market for manufacture and sale of decorative paints by the organised sector in
- Market for decorative paints separate from industrial paints: There are numerous differences between decorative paints and industrial paints including, basic characteristics, intended use and price.
- Organised versus unorganised sectors: Players in the unorganised sector do not compete with players in the organised sector due to various reasons, such as, brand image, difference in pricing, and quality. Therefore, the relevant market for decorative paints was limited to organised players.
- Relevant geography
India due to homogenous competition conditions: There are no State regulatory trade barriers in the paint industry. Consumer preferences are not regional and are based on brands which are national. Therefore, the relevant geography is national and not regional.
B. Dominance
The CCI held
- Highest market share: In FY 2018-19,
Asian Paints had the highest market share based on revenues (56.33%), while its next competitor,Berger Paints stood at 19.19%. - Analysis on inclusion of unorganized market: Even if the unorganized sector is included, the market share of
Asian Paints , based on revenue, was 37.11% whileBerger Paints stood at 12.64%. - Large number of dealers: Extensive dealership networks are required in the decorative paints market to create a strong presence.
Asian Paints had 60,000 dealers while its next best competitor had 25,000 dealers. A large number of dealers meant thatAsian Paints had deeply penetrated the relevant market and had a competitive advantage over its competitors. - Dealers' lack of countervailing power: Most dealers were small traders with few resources dependent upon
Asian Paints and lacked countervailing buying power. - Consistent high market share: Four paint companies occupied 80% of the relevant market with
Asian Paints consistently maintaining the highest market share over the years.
C. Abuse of Dominance
The CCI held
- Denial of a necessary distribution network:
Asian Paints denied JSW access to a necessary distribution network by coercing dealers (small and medium size enterprises) not to deal with JSW. - Denial of infrastructure: An instance of
Asian Paints pressurizing an enterprise providing warehousing facilities to JSW was brought to the CCI's attention. - Directions to paint dealers: The following practices of
Asian Paints ensured that paint dealers stopped dealing with JSW: - Explicit directions to stop dealing with JSW;
- Stopping supplies to dealers dealing with JSW;
- Dropping service levels by delaying supplies and deliveries to dealers dealing with JSW;
- Direction to remove JSW products from retail shelves;
- Direction to remove JSW signboards; and
- Disallowing discretionary discounts and loyalty schemes to dealers dealing with JSW.
- Evidence adduced: Instances of abusive conduct of
Asian Paints inKarnataka ,Tamil Nadu and Telangana were submitted to the CCI along with a transcript of a conversation between a dealer and representatives ofAsian Paints .
III. ANTI-COMPETITIVE VERTICAL AGREEMENTS WITH DEALERS
The CCI found a prima facie case against
Threats of punitive action against dealers: The CCI observed that
IV. DETAILED INVESTIGATION BY DG
The CCI directed the Director General to conduct a detailed investigation into allegations of abuse of dominance and anti-competitive agreement by
URL: https://www.cci.gov.in/sites/default/files/36-of-2019.pdf .
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