Asian Paints Shares Fall 2% Amid CCI Investigation

NEW DELHI: Shares of Asian Paints took a hit, declining by nearly 2% during morning trade, after the Competition Commission of India (CCI) ordered an investigation into the company for allegedly abusing its dominant position in the market for manufacturing and sale of decorative paints.

The stock dipped 1.78% to Rs 2,326.45 on the BSE. At the NSE, it went lower by 1.79% to Rs 2,327.

The direction for the investigation follows a complaint filed by Grasim Industries (Birla Paints Division), which accused Asian Paints of engaging in exclusionary practices aimed at stifling its entry and growth in the Indian decorative paints segment.

CCI stated in its order, 'The Commission is of the opinion that a prima facie case of contravention of the provisions of section 4(2)(a)(i), 4(2)(c), and 4(2)(d) of the Act by the OP (Asian Paints) is made out in the present matter.' Section 4 of the Competition Act, 2002, prohibits abuse of dominant position.

Accordingly, the fair trade regulator directed the Director General to conduct an investigation and submit a report within 90 days.

Grasim, a part of the Aditya Birla Group, entered the decorative paints segment under the 'Birla Opus Paints' brand in February last year. Asian Paints is a market leader, manufacturing paints for both decorative and industrial use.

The competition regulator observed that Asian Paints, by restraining its dealers from dealing with competitors like Grasim Industries Ltd, is imposing unfair conditions upon them, which is considered exploitative conduct.