CCI orders probe against Asian Paints on Grasim’s complaint

The Competition Commission of India (CCI) on July 1 ordered the Director General (DG) to investigate Asian Paints Ltd. for alleged abuse of dominance in the decorative paints market, following a complaint by Grasim Industries Ltd.’s Birla Paints Division.

The CCI held that a prima facie case of contravention of Sections 4(2)(a)(i), 4(2)(c), and 4(2)(d) of the Competition Act, 2002 was made out and warranted investigation.

“The OP, by way of restraining its dealers from dealing with the OP’s competitors like the Informant by enforcing exclusivity upon such dealers is imposing unfair conditions upon them... [and] seems to be prima facie creating barriers to new entrants in the market as well as partially foreclosing competition in the market,” the CCI noted.

The informant, Grasim Industries Ltd. (Birla Paints Division), alleged that Asian Paints leveraged its dominant position to block Grasim’s entry into the decorative paints market, where it had launched operations in March 2024 under the brand ‘Birla Opus Paints’.

The alleged conduct included coercing dealers into exclusive arrangements, interfering with Grasim’s supply chain and distribution network and suppressing installation of its tinting machines at retail outlets. Asian Paints was also accused of launching a smear campaign in Srinagar in July 2024.

Among other things, Grasim alleged that Asian Paints:

• Reduced dealer incentives, credit limits and customer leads if they stocked Birla Opus paints;

• Directed dealers to return or avoid installing Grasim’s more advanced tinting machines;

• Offered arbitrary incentives such as foreign travel to enforce exclusivity;

• Pressured raw material suppliers, C&F agents, warehouse owners, and transporters to sever ties with Grasim.

Grasim submitted third-party market surveys, affidavits, audio recordings, and dealer statements in support of its claims.

The CCI adopted "manufacture and sale of decorative paints in the organized sector in India" as the relevant market for consideration.

It further reaffirmed Asian Paints’ dominant position based on:

• Market share above 50% (with over 1.6 lakh retail touchpoints and 74,000 dealers);

• Installed capacity of 1,850 million litres per annum;

• Market capitalization of ₹2.6 lakh crore and industry-leading P/E ratio; and

• Profit after tax of over ₹5,300 crore in FY 2024.

The CCI observed that despite Grasim’s rapid rise to become India’s third-largest brand in just six months—generating revenues of over ₹2,600 crore and establishing 50,000 dealers—it did not displace the structural dominance held by Asian Paints in the market.

Based on the evidence, the CCI observed:

“It prima facie appears that many dealers are facing issues with the OP enforcing exclusivity upon them by coercing them against stocking other manufacturers’ paints... which amounts to imposition of unfair conditions upon dealers…”

It also found prima facie evidence that Asian Paints’ conduct resulted in denial of market access through input foreclosure and imposition of supplementary obligations unrelated to dealer performance.

However, the Commission did not express an opinion on whether technical development had been limited under Section 4(2)(b), stating that the technological superiority of Grasim’s tinting machines could not be confirmed on the material available.

The DG was directed to complete the investigation within 90 days. The CCI clarified that its observations are only prima facie and should not influence the DG’s inquiry.

Grasim was represented by a team from JSA Advocates & Solicitors comprising  Nisha Kaur Uberoi, Partner & Chair – Competition Practice, Sarthak Pande (Principal Associate)  Shivangi Chawla (Senior Associate) and Keerthana Kesavan, Mehar Singh Dang and Sudhanshu Singh (Associates).

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