Grasim vs. Asian Paints: CCI Finds Prima Facie Case of Anti-Competitive Conduct

The Competition Commission of India (CCI) has initiated an investigation into Asian Paints Ltd. following a complaint by Grasim Industries Ltd. (Birla Paints Division) under Section 19(1)(a) of the Competition Act, 2002, alleging that Asian Paints engaged in exclusionary practices that hindered Grasim’s entry and growth in the decorative paints market, an industry characterized by a few dominant players. The Competition Commission of India (CCI) has found a prima facie case in the ongoing battle of Grasim vs. Asian Paints, hinting at possible anti-competitive conduct that could impact India’s decorative paints market.

| Grasim vs. Asian Paints: CCI Finds Prima Facie Case of Anti-Competitive Conduct |

Grasim Industries Ltd., a flagship company of the Aditya Birla Group and a publicly listed entity, entered the decorative paints market in India at the end of FY 2024 under the brand name ‘Birla Opus Paints’. The company alleges that its entry has been met with exclusionary practices by Asian Paints Ltd. Asian Paints Ltd., established in 1942, is the largest public company in the decorative paints market in India, with operations in 15 countries and 27 manufacturing facilities. Asian Paints has been the market leader since 1967 and is accused by Grasim of abusing its dominant position to the detriment of competition and new entrants.

Grasim’s complaint centers on the claim that Asian Paints has abused its dominance in the market for manufacture and sale of decorative paints in the organized sector in India. The specific allegations include:

• Offering additional discounts, incentives, and benefits (such as foreign travel) to dealers in exchange for exclusivity, without a uniform policy or performance linkage.

• Enforcing de facto exclusivity by threatening dealers who stock Grasim’s paints, including reducing their credit limits, increasing sales targets, recalling benefits, and opening competing dealerships nearby.

• Directing dealers to return or not use tinting machines supplied by Grasim.

• Restricting third-party suppliers from providing essential raw materials to Grasim.

• Coercing landlords, C&F agents, and transporters to avoid engaging with Grasim, thereby restricting logistics and transportation.

• Subjecting Grasim to a smear campaign.

These actions are alleged to violate Section 4(2)(a), 4(2)(b), 4(2)(c), and 4(2)(d) read with Section 4(1) of the Competition Act, 2002, covering the imposition of unfair conditions, limiting technical development, denial of market access, and imposition of supplementary obligations unrelated to performance.

The CCI, referencing its earlier decision in the JSW Paints Pvt. Ltd. case, defined the relevant market as the “market for manufacture and sale of decorative paints in the organized sector in India.” The distinction between decorative and industrial paints, as well as between organized and unorganized sectors, was maintained. The Commission found that competition conditions are homogeneous across India, making the entire country the relevant geographic market. While Grasim suggested a narrower market definition based on dealer categories, the CCI did not find it necessary to further narrow the market at this stage, noting that the alleged conduct was directed at dealers in general.

Grasim supported its dominance claim by highlighting Asian Paints’ consistent market leadership, with a market share of approximately 53.2% in 2024, compared to Berger Paints (14.2%) and Kansai Nerolac (7.3%). Asian Paints also has an installed capacity of 1,850 MLPA, a market capitalization of INR 2.6 lakh crores, and a dealer network exceeding 74,000. Asian Paints, in its response, described the Indian paint market as highly competitive, with 9-10 major players and numerous regional entities. The company pointed to Grasim’s rapid growth achieving a high single-digit market share and a network of 50,000 dealers within six months as evidence of low entry barriers and the absence of anti-competitive conduct.

The CCI, after considering the submissions from both parties and additional information, decided to pass an appropriate order in due course. The Commission acknowledged the seriousness of the allegations but also took note of the rapid expansion achieved by Grasim, suggesting that the market remains accessible to new entrants.

Conclusion

Based on the material before it, the CCI concluded that a prima facie case of contravention existed and warranted a full investigation. The Commission directed the Director General (DG) to conduct a detailed probe into Asian Paints’ practices and submit a report within 90 days. The order clarified that these findings are preliminary and should not prejudice the outcome of the DG’s investigation.