JSW Paints informed the commission that immediately after its launch of decorative paints, Asian Paints allegedly began pressurising dealers who had agreed to stock and display their goods. Asian Paints targeted dealers, distributors and retailers partnering with JSW Paints and directed them to stop dealing with JSW Paints, according to the complainant.
"Asian Paints did this through its sale personnel in the relevant regions. Such conduct has been alleged to have created fear amongst retailers/dealers, as a result of which a number of them stopped dealing with JSW Paints, despite having provided the initial cheque of Rs 1 lakh. JSW Paints, it has been alleged, has been denied access to dealers, which infrastructure is essential for operating in the relevant market, due to punitive action taken by Asian Paints against the dealers," the CCI order said.
It has directed the Director General of the CCI to investigate the matter under the provisions of Section 26(1) of the Competition Act. The anti-trust body also directed the DG to complete the investigation and submit the investigation report within a period of 60 days from the receipt of this order.
"Based on material available on record, the Commission is of the view that evidence provided by JSW Paints is prima facie sufficient to indicate that Asian Paints has denied access to the distribution channels in the relevant market to JSW Paints by threatening and coercing such dealers through various means. In view of foregoing, Asian Paints, prima-facie, appears to be in contravention of provisions of Section 4(2)(c) of the Act," the order dated dated January 14 said.
According to JSW Paints, it has so far faced problems in Karnataka, Tamil Nadu and Telangana, so far. The company further told the commission that it had planned to launch its products in more states and cities in south and west India like Andhra Pradesh, Goa, Maharashtra, Gujarat among other states in the ensuing months and also introduce its products to dealers in upcountry towns, supplying from its warehouses in larger towns.
It, however, believed that it would be denied access to dealers even in these states in the absence of intervention by the Commission and would face the same resistance in other regions as well due to coercive action taken by Asian Paints against the dealers, the CCI order said.
Asian Paints, in a regulatory filing on Wednesday, said: "The company is currently examining the order and will take appropriate legal recourse and will extend full co-operation to CCI in the matter."
( With inputs from IANS )