Supreme Court refuses intervention in Asian Paints market abuse investigation

New Delhi: The Supreme Court on Monday declined to entertain a plea by Asian Paints challenging the Competition Commission of India’s (CCI) order directing an investigation into alleged abuse of its dominant position in the decorative paints market.

A bench of Justices JK Maheshwari and Vijay Bishnoi refused to interfere with the Bombay High Court order, which had upheld the CCI probe. As the apex court did not consider the matter for hearing, the plea was dismissed as withdrawn.

The CCI’s directive followed a complaint from Grasim Industries (Birla Paints Division), which alleged that Asian Paints engaged in exclusionary practices intended to limit its entry and growth in India’s decorative paints segment.

“The Commission is of the opinion that a prima facie case of contravention of the provisions of section 4(2)(a)(i), 4(2)(c) and 4(2)(d) of the Act by the OP (Asian Paints) is made out in the present matter,” the CCI stated.

Section 4 of the Competition Act, 2002, prohibits abuse of a dominant market position. Following the order, the fair trade regulator directed the Director General (DG) to conduct an investigation and submit a report within 90 days.

Grasim, part of the Aditya Birla Group, launched its decorative paints business under the ‘Birla Opus Paints’ brand in February 2024.

The regulator noted that “OP (Asian Paints) by way of restraining its dealers from dealing with the OP's competitors like the informant (Grasim Industries Ltd) by enforcing exclusivity upon such dealers is imposing unfair conditions upon them, which is found to be in the nature of exploitative conduct.”

Further, the CCI observed that Asian Paints, by “restraining suppliers of essential raw materials from providing goods and services to the OP's competitors like the informant, as well as by coercing landlords, C&F agents and transporters to refrain from engaging with competitors like Grasim, seems to be prima facie creating barriers to new entrants in the market as well as partially foreclosing competition in the market.”

The regulator added that the conduct of Asian Paints appears to be “prima facie causing an appreciable adverse effect on competition in India.” The order also clarified that these observations do not constitute a final view on the merits of the case and instructed the DG to conduct the investigation independently.