Asian Paints Faces CCI Probe Over Alleged Abuse of Market Dominance
| 2025-07-04
CCI Orders Probe Against Asian Paints for Alleged Abuse of Dominant Position in Decorative Paints Market. (Image Source: Reuters)
India’s Competition Commission orders a probe into Asian Paints on claims of anti-competitive practices by Aditya Birla’s Grasim Industries.
In an order issued this week, the CCI stated that, based on initial evidence, Asian Paints appeared to have imposed unfair restrictions on dealers and suppliers to limit access for competing brands.
"Asian Paints, by restraining its dealers from engaging with competitors like Birla Opus Paints through enforcement of exclusivity, is imposing unfair conditions upon them, which is found to be in the nature of exploitative conduct," the Commission observed in its order.
The regulator further alleged that Asian Paints may have attempted to prevent suppliers of essential raw materials, as well as landlords and logistics providers, from working with Grasim Industries. According to the CCI, such conduct prima facie creates barriers for new entrants and limits competition within India’s decorative paints market.
Asian Paints has responded by stating it is reviewing the order and intends to cooperate fully with the investigation. “The Company remains committed to fully cooperating with the CCI during the course of the investigation,” Asian Paints said in a filing to the stock exchange.
The CCI clarified that its observations are preliminary and do not reflect a final conclusion on whether Asian Paints violated competition law. The Director General has been instructed to submit an investigative report within 90 days of receiving the order, although legal experts noted that probes of this nature often take longer due to the complexity of evidence collection and cross-examination.
The complaint filed by Grasim Industries alleges that Asian Paints employed a range of tactics to deter dealers from stocking Birla Opus products. These included threats to reduce credit limits and alter service agreements if dealers failed to maintain exclusive arrangements. Grasim also claimed Asian Paints discouraged the installation of tinting machines supplied by the new entrant, which are crucial for custom paint mixing at retail outlets.
In its defence, Asian Paints argued that Birla Opus had already established a significant presence since its market debut in March 2024. The company cited research by Jefferies, a financial services firm, which estimated that Birla Opus had built a network of about 50,000 dealers and deployed an equal number of tinting machines within a year—surpassing several longer-established competitors.
M M Sharma, head of competition law at Vaish Associates Advocates, described the CCI’s decision as a balanced approach. “This is a case of a dominant player allegedly enforcing exclusivity to exclude rivals from the market by using threats and other unfair measures,” he said.
India’s decorative paint sector, valued between 800 billion and 900 billion rupees (approximately $10–11 billion), is dominated by Asian Paints, which holds more than half of the country’s installed production capacity. The company operates an extensive distribution network of around 74,000 dealers across 160,000 retail touchpoints.
However, the arrival of Birla Opus has intensified competition. Data from Elara Capital indicates that Birla Opus reached nearly 7% market share by March this year, eroding some of Asian Paints’ dominance.
Context
Competition law in India is governed by the Competition Act of 2002, which prohibits enterprises from abusing a dominant position that can harm market competition. The CCI has increasingly scrutinised large companies in sectors such as technology, e-commerce, and manufacturing, amid concerns about unfair practices that restrict smaller competitors.
If the Director General’s investigation confirms that Asian Paints breached competition rules, the company could face financial penalties and be required to alter its business practices to restore fair competition.
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