Chakra R Prabhakaran vs. Tamil Nadu State Marketing Corporation Limited

Case No. 02 of 2024 1 COMPETITION COMMISSION OF INDIA Case No. 02 of 2024 In Re: Chakra R Prabakaran 193, Fourth Cross Krishna Garden Chavadi, Kondur- Post Cuddalore 607006, Tamil Nadu Informant And Tamil Nadu State Marketing Corporation Limited (TASMAC) CMDA Tower- II, IV Floor, Gandhi Irwin Bridge Road, Egmore, Chennai - 600008 Opposite Party CORAM: Ms. Ravneet Kaur Chairperson Mr. Anil Agrawal Member Ms. Sweta Kakkad Member Mr. Deepak Anurag Member Case No. 02 of 2024 2 Order under Section 26(1) of the Competition Act, 2002 1. The present Information has been filed by Chakra R Prabakaran (‘Informant’) under Section 19(1)(a) of the Competition Act, 2002 (‘Act’), against Tamil Nadu State Marketing Corporation Limited (‘TASMAC/Opposite Party’/OP’) inter alia alleging contravention of the provisions of Section 4 of the Act. 2. The Informant has stated that TASMAC is a Tamil Nadu state government wholly owned company registered under Companies Act to sell liquor through its 5000+ retail outlets in Tamil Nadu directly to consumers. The information further provides that TASMAC has exclusive rights to sell alcoholic products to consumers in the state of Tamil Nadu. 3. The Informant has alleged that TASMAC is selling only few beer brands, particularly brands like “SNJ 10000” and “British Empire” to name a few which are produced by particular distilleries, which impedes competitiveness of other beer brands in the market and discourages competition in business. 4. The Informant has alleged that TASMAC has formed a nexus with SNJ Breweries and few other breweries to purchase only particular beer brands from these breweries and sell through its 5000+ shops to consumers, while other beer brands are not given the opportunity to sell their products as liquor products are exclusively sold to public consumers through TASMAC. 5. The Informant has attached a white paper titled “TASMAC- Free Tamil Nadu”, published by Tamil Nadu BJP president K. Annamalai as evidence to support the allegations. The white paper inter alia states that “SNJ continues to hold sway over the beer that is pushed to the market. Although there are 46 brands of beer in Tamil Nadu, only 4-5 brands are available for consumers - SNJ 10000 and British Empire made by SNJ Breweries are among the few options that consumers can choose from. Despite there being 46 brands of beer available, it is alarming to note that only a limited number, such as SNJ 10000 and British Empire produced by SNJ Breweries, are made accessible to consumers. This raises concerns about the lack of variety and choice available to consumers, suggesting a potential Case No. 02 of 2024 3 monopolistic control exerted by certain liquor manufacturing companies in collusion with TASMAC.” 6. The Informant has sought interim relief in the nature of – “Closing of 50% of TASMAC shops in Tamil Nadu within 15 days of interim order.” The Informant has stated that selling and promoting particular beer brands through TASMAC shops means that other beer brands do not have fair opportunity to sell their products to the public. 7. Informant has sought the following relief from the Commission: (a) Closing all TASMAC Liquor shops in a phased manner within a year-2024. (b) Imposition of Penalty on TASMAC and suppliers for causing appreciable adverse effect on competition. 8. The Commission considered the matter in its ordinary meeting held on 12.06.2024 and decided to seek responses/comments from the OP on the following within four weeks from the date of the receipt of the order: a) What is the selection criteria for brands of beer to be procured periodically and made available at TASMAC retail outlets in Tamil Nadu? Please indicate the official policy (if any) and the process for selection and division of total volume across beer manufacturers in this regard. b) Please provide a list of manufacturers of beer and their respective brands, along with the quantity of beer procured from them and made available at the TASMAC retail outlets in Tamil Nadu (on a monthly basis), along with volume-wise share (in %) for each brand in the last 3 financial years. 9. Subsequently, the Commission considered the matter in the ordinary meeting held on 14.08.2024 and noted that no responses/comments were received from the OP till date. The Commission directed that in the interest of justice, another opportunity may be provided to OP to file responses/comments as sought vide order dated 12.06.2024 within four weeks from the date of the receipt of the order. Case No. 02 of 2024 4 10. The Commission further considered the matter in the ordinary meeting held on 23.10.2024 and noted that no responses/comments have been received from the OP till date. The Commission directed that in the interest of justice, another opportunity may be provided to OP to file responses/comments as sought vide order dated 12.06.2024 within four weeks from the date of the receipt of the order. 11. Meanwhile, vide email dated 18.11.2024, the Informant inter alia stated that – “As per the Tamil Nadu government owned exclusive liquor selling company - TASMAC, they are not providing the annual brand wise beer sold in the last three years, even when requested through right to information act..TASMAC management directed its district officers to provide the data, but most of the district officers did not provided the asked data, citing various reasons. This data is not available in the TASMAC website or in any public domain.” The Informant requested the Commission to take necessary action to get the data to proceed further in the case. However, such data had already been sought by the Commission vide its order dated 12.06.2024. 12. Subsequently, the Commission considered the matter in the ordinary meeting held on 12.12.2024 and noted that no responses/comments have been received from the OP till date. The Commission directed that in the interest of justice, last opportunity may be provided to OP to file responses/comments as sought vide order dated 12.06.2024 within four weeks from the date of the receipt of the order. 13. The Commission considered the matter in its ordinary meeting held on 29.01.2025 and decided to pass an appropriate order in due course. 14. Subsequently, TASMAC submitted its response vide its letter dated 28.01.2025, received on 03.02.2025. 15. In its response, TASMAC inter alia stated the following – “In Tamil Nadu State Marketing Corporation, procurement of Beer is system based indent generation. TASMAC follows the weighted average sales calculation method to place monthly order for IMFS/Beer manufacturers. The monthly order is auto Case No. 02 of 2024 5 generated in the corporate office using software on the 1st day of every month. Since, computerization of TASMAC IMFS Depots, a scientific method for placing indents is being followed which was finalized by the internal committee constituted in the year 2015-2016. Considering the following factors the committee derived the guidelines for calculating the requirements of brands. (i) Present stock position of various brands of the respective companies in the godown and stock in transit. (ii) The previous 3 months sales of the concerned brand/ pack/ depot. The following purchase policy formula is adopted for issue of monthly orders for IMFS and Beer on the 1st day of every month. (iii) Weighted Average Sale Calculation