CCI orders probe against Pernod Ricard over alleged brand pushing under Delhi Excise Policy 2021-22

The Competition Commission of India (CCI) has ordered a probe against Pernod Ricard India and seven other entities over allegations of exclusive dealing and brand pushing in the Indian Made Foreign Liquor (IMFL) market under the Delhi Excise Policy 2021-22. [Mohit v. Pernod Ricard].A coram of CCI Chairperson Ravneet Kaur and Members Anil Agrawal, Sweta Kakkad and Deepak Anurag directed the Director General (DG) to complete the investigation within 90 days..The order was passed on information filed by one Mohit, who alleged bid rigging, cartelisation and anti-competitive arrangements in Delhi’s liquor trade..The CCI, however, found insufficient material to order an investigation into allegations of bid rigging in country liquor and IMFL tenders floated by the Delhi Excise Department. It said that the material on record did not disclose a prima facie case on those allegations.However, the Commission found a prima facie case against Pernod Ricard, Indo Spirits, Pathway HR Solutions, Universal Distributors, Khao Gali Restaurants, Bubbly Beverages, Shiv Associates and Organomix Ecosystems.It said that the alleged arrangement between Pernod Ricard and certain wholesalers and retailers could fall within the scope of an “exclusive dealing agreement” under Section 3(4)(b) of the Competition Act, 2002.The Commission noted that Pernod Ricard allegedly entered into arrangements with retailers and wholesalers to push its brands and increase its market share in Delhi..It observed that such conduct was likely to distort supply and demand in the market.“Such conduct is likely to have Appreciable Adverse Effect on Competition (‘AAEC’) in as much as the non-dealing in the product of the competitors through vertical arrangements between Pernod Ricard and retailers...thereby leading to a situation of driving existing competitors out of the market,” the CCI said..The Commission also noted an email dated July 13, 2021 among Pernod Ricard employees which referred to creating a “strategic advantage” in 20 out of 32 proposed retail zones in Delhi. The email also referred to financial support of €23 million to certain associates in the form of corporate guarantees for three-year loans provided by HSBC. The informant had alleged that Pernod Ricard proposed financial assistance of ₹200 crore to select retailers in the form of corporate guarantees. The entities allegedly supported included Pathway HR Solutions, Universal Distributors, Khao Gali, Bubbly Beverages and Shiv Associates.The Commission further took note of allegations that Pernod Ricard issued credit notes selectively. It recorded that Pernod Ricard allegedly gave credit notes worth ₹61.01 lakh to Organomix Ecosystems, despite another entity, Adharv Enterprises, having purchased higher volumes during the same period..The CCI also referred to the CAG Report, which flagged links between wholesalers and retailers under the Delhi Excise Policy. It noted that Indo Spirits was Pernod Ricard’s wholesaler, while Khao Gali was a retailer allegedly linked to Indo Spirits. The Commission said that wholesalers acquiring retail licences through proxy ownership increased the risk of concentration, exclusive arrangements and brand pushing.It flagged that the restrictive conduct allegedly adopted by Pernod Ricard with its retailers and wholesalers to induce brand pushing and increase its market share required investigation..The Commission also clarified that the DG would be free to investigate any other entity or person if anti-competitive conduct is found during the probe. The DG has also been directed to examine the role of officers who were in charge of the entities at the time of the alleged contravention..[Read Order]