CCI’s Findings on Alleged Abuse of Dominance by Asian Paints in JSW Paints Dispute

Background and Context

In JSW Paints (P.) Ltd. v. Asian Paints Ltd. (Case Nos. 36 of 2019 & 17 of 2021), the Competition Commission of India (CCI) examined whether Asian Paints Limited had breached Section 3(4) and Section 4 of the Competition Act, 2002 by allegedly using its strength in the decorative paints segment to block the market entry and expansion of JSW Paints Private Limited.

Two informants approached the CCI:

  • JSW Paints Private Limited
  • Sri Balaji Traders (a dealer)

Both alleged that Asian Paints had leveraged its position and dealer relationships to prevent dealers from associating with JSW Paints, effectively restricting JSW Paints’ access to the downstream distribution network in the decorative paints market.

After a detailed investigation by the Director General (DG) and a full hearing of the parties, the CCI ultimately concluded that no contravention of Section 3(4) or Section 4 was made out.

This decision is an important illustration of the distinction in Indian competition law between being dominant and abusing dominance, and of the evidentiary burden on an informant to substantiate allegations of exclusionary conduct.

Factual Matrix

Entry of JSW Paints and Market Dynamics

In 2019, JSW Paints, part of the JSW Group, entered the decorative paints business. As a new entrant, it focused initially on urban centres in southern India and adopted an aggressive growth strategy, including:

  • Attractive incentive schemes for dealers
  • Targeted marketing and promotional efforts
  • Efforts to rapidly build a multi-brand dealer network

JSW Paints alleged that as its presence began to grow, Asian Paints reacted by pressuring dealers not to engage with JSW Paints.

Allegations by JSW Paints and Sri Balaji Traders

The two informants levelled the following broad allegations:

  • Asian Paints threatened dealers with:
    • Curtailment or stoppage of supply
    • Adverse change in service quality
    • Withdrawal of incentives or loyalty benefits
    • Changes in credit terms or credit limits
  • Asian Paints allegedly warned dealers that continuing to deal with JSW Paints could affect their relationship, status or benefits with Asian Paints.
  • Sri Balaji Traders specifically claimed:
    • Its internal classification within Asian Paints’ retailer hierarchy was downgraded after it started dealing with JSW Paints.
    • This downgrade was portrayed as a punitive measure meant to deter dealings with JSW Paints.

The informants asserted that these practices collectively amounted to:

  • Anti-competitive vertical arrangements under Section 3(4) (including, in particular, exclusive supply agreements and refusal to deal); and
  • Abuse of dominant position under Section 4, especially Section 4(2)(c) relating to denial of market access.

The allegations were framed primarily under:

  • Section 4(2)(c) – abuse of dominant position by denial of market access in any manner
  • Section 3(4) – anti-competitive vertical restraints, including:
    • Exclusive supply agreement
    • Refusal to deal
  • Read with the requirement of Appreciable Adverse Effect on Competition (AAEC) in India

The CCI clubbed the two informations and directed the DG to undertake an investigation under Section 26(1) of the Competition Act, 2002.

Issues Considered by CCI

The CCI identified and analysed three central questions:

  1. Relevant Market and Dominance

    • What is the relevant market in this case?
    • Does Asian Paints hold a dominant position in that market?

  2. Abuse of Dominant Position under Section 4

    • Assuming dominance, did Asian Paints engage in conduct amounting to abuse?
    • Was there denial of market access to JSW Paints within the meaning of Section 4(2)(c)?