Competition Order on Grasim Industries and Asian Paints

COMPETITION COMMISSION OF INDIA Case No. 32 of 2024

In Re: Grasim Industries Ltd. (Birla Paints Division) Informant

And

Asian Paints Ltd. Opposite Party

CORAM

Ms. Ravneet Kaur Chairperson

Mr. Anil Agrawal Member

Ms. Sweta Kakkad Member

Mr. Deepak Anurag Member

ORDER UNDER SECTION 26(1) OF THE COMPETITION ACT, 2002

1. The Information in the present matter has been filed by Grasim Industries Limited (Birla Paints Division) (‘Informant’) under Section 19(1)(a) of the Competition Act, 2002 (the ‘Act’) against Asian Paints Limited (‘OP’), alleging abuse of dominant position by the OP in contravention of the provisions of Section 4 of the Act.

2. The Informant is stated to be a flagship company of the Aditya Birla conglomerate and a publicly listed company on the National Stock Exchange and Bombay Stock Exchange. It is stated to be involved in several industries including manufacturing of man-made fibers, chemicals, etc. It is stated that at the end of last quarter of Financial Year (‘FY’) 2024, the Informant entered the decorative paints market in India under the brand name ‘Birla Opus Paints’ (except for the pre-launch of wood finish paint in June 2023).

3. The OP is stated to be the largest public company in the decorative paints market in India. It is said to have been established in the year 1942 and currently operating in 15 countries with 27 manufacturing facilities in the world. It is stated to have been a market leader in the paints industry since 1967, and manufacturing paints for both decorative and industrial use.

4. The Informant has alleged that the OP, being an ‘enterprise’ within the meaning of the Act, has abused its dominant position, in the relevant ‘market for manufacture and sale of decorative paints in the organized sector in India’, by, inter alia:

• (i) Offering additional/ extra discounts/ condonations/ incentives like foreign travel etc. to its dealers in exchange for exclusivity, which is arbitrary in nature and not linked to any uniform policy or based on performance/ sales of the dealer;
• (ii) Exercising and enforcing de facto exclusivity upon dealers by threatening them against stocking the Informant’s paints by, inter alia:
  • Reducing the credit limit and revision of service levels for dealers that engage with the Informant;
  • Increasing and enhancing sales targets for dealers engaging with the Informant and accordingly, recalling their benefits like foreign travel etc.;
  • Reducing customer leads, termination of relations with institutional customers and taking other punitive actions like reduction in product offerings, low priority for servicing orders, opening competing dealerships in vicinity, etc., in the event the dealers engage with the Informant;
• (iii) Directing its dealers to return/ not use or not install the tinting machines supplied by the Informant;
• (iv) Restraining third parties, including suppliers of essential raw materials, from providing goods and services to the Informant;
• (v) Coercing landlords, Clearing and Forwarding (‘C&F’) Agents and transporters to refrain from engaging with the Informant, restricting logistics and transportation of goods; and
• (vi) Subjecting the Informant to a fake smear campaign etc.

5. Making the aforesaid allegations, the Informant has averred that the OP is indulging in violation of the provisions of Section 4(2)(a), 4(2)(b), 4(2)(c) and 4(2)(d) read with Section 4(1) of the Act, as follows:

• (i) Section 4(2)(a) – Imposition of discriminatory and unfair conditions upon dealers in sale of decorative paints to not deal with the Informant;
• (ii) Section 4(2)(b) – Limiting and restricting technical development of decorative paints market by restricting dealers from using more technologically advanced tinting machines of the Informant;
• (iii) Section 4(2)(c) – Denial of market access to competitors like the Informant through input foreclosure; and
• (iv) Section 4(2)(d) – Imposition of supplementary obligations upon dealers by offering incentives not related to performance.

6. Thereafter, the Informant also filed an Interlocutory Application (‘I.A.’) bearing no. 434 of 2024 on 27.12.2024 seeking urgent consideration of the Information as the anti-competitive conduct of the OP is significantly and adversely impacting its business operations.

7. The Commission, upon consideration of the Information in its ordinary meeting held on 29.01.2025, sought certain additional information from the Informant. The Informant filed its response to said order of the Commission on 06.03.2025.

8. The Commission considered the matter in its ordinary meeting held on 09.04.2025 and decided to pass an appropriate order in due course.

9. Meanwhile, on 05.06.2025 and thereafter on 09.06.2025, the Commission received an intimation from the OP, inter alia, seeking an opportunity to present its position before the Commission through an oral hearing, before any decision is taken in the matter.

10. The OP submitted that the Indian paint market is highly competitive comprising 09-10 players (including multi-nationals) and number of other regional entities. The decorative paints industry has low barriers to entry, which is evidenced by successful entry and rapid expansion of several new players in this market in the recent years. Further, it stated that paint products are distributed through a vast network of multi-brand dealers, including electrical, hardware, sanitary, PVC pipe, and cement shops. Also, a significant majority of paint dealers represent at least 2-3 paint companies, and nearly all also work with regional players.

11. The OP also stated that no other paint company has been able to scale up in the manner that the Informant has, since its entry in March 2024. As per the OP, the Informant has invested heavily in manufacturing and distribution, and recruited talent from across the industry, including from the OP. It has achieved gross revenue of INR 2,600 to 2,700 crores in its first year itself and as per its own internal estimates, became India’s no. 3 decorative paint brand within just six (06) months of nationwide operations. By its own admission, the Informant has also been able to achieve a high single digit market revenue share in the decorative paints segment in the fourth quarter of Financial Year 2025 and also has the 2nd largest depot network in the industry. It has also been submitted by the OP that as per an Equity Research Report by Jefferies (May 2025), the Informant has established a network of approximately 50,000 dealers and an equal number of colour tinting machines, surpassing the reach of many long-established players. The OP has further submitted that leveraging its existing cement business, the Informant can access over 2,00,000 dealers nationwide, facilitating rapid expansion in its paint segment. Such rapid and substantial growth of the Informant demonstrates absence of any significant entry barriers or anti-competitive conduct by existing players, including the OP. Reference has also been made by the OP to the Commission’s earlier inquiry in the matter of JSW Paints Pvt. Ltd. and Another v. Asian Paints Ltd. (Case Nos. 36 of 2019 and 17 of 2021).

Enterprise

12. The Commission notes that the OP is a publicly listed company engaged in the business of manufacturing, selling and distribution of paints, coatings, products related to home décor, bath fittings and providing related services. As such, it is engaged in an ‘economic activity’, thereby qualifying it as an ‘enterprise’ within the meaning of Section 2(h) of the Act.

Relevant Market