In a significant regulatory development, the Competition Commission of India (CCI) has ordered an investigation against Asian Paints Ltd, the country’s largest paints manufacturer, for alleged abuse of its dominant market position to stifle competition and restrict dealer choices, raising major concerns over fair practices in India’s booming decorative paints sector.
The antitrust body issued its directive after examining complaints filed by JSW Paints and other smaller regional players, accusing Asian Paints of threatening to cut supplies or withdrawing dealership rights if dealers stocked competing brands, in violation of the Competition Act, 2002.
🔍 What Are The Allegations?
| Allegation | Details |
|---|---|
| Exclusive dealing | Asian Paints allegedly forced dealers to refrain from stocking rival products, effectively foreclosing market access to new entrants. |
| Threats and supply disruption | Dealers stocking JSW Paints and others faced alleged supply cuts of high-demand Asian Paints products. |
| Restrictive trade practices | Asian Paints’ market strategy allegedly denied consumer choice and hampered competition-led pricing. |
🏦 CCI’s Observation
The Commission noted “sufficient prima facie evidence” indicating abuse of dominant position under Section 4 of the Competition Act. The order stated:
“Asian Paints, as a dominant enterprise, has a special responsibility not to allow its conduct to impair genuine competition in the market. The allegations warrant detailed investigation.”
📊 Asian Paints’ Market Position
| Company | Market Share (%) | FY25 Revenue (Rs crore) |
|---|---|---|
| Asian Paints | 53 | 36,800 |
| Berger Paints | 12 | 8,600 |
| Kansai Nerolac | 10 | 7,500 |
| JSW Paints | 4 | 2,100 |
| Others (independent & regional) | 21 | ~14,000 |
(Source: CRISIL Decorative Paints Market Report FY25)
Asian Paints’ market share in the decorative paints segment has remained above 50% for nearly two decades, owing to its deep dealer network, brand strength, and extensive supply chain efficiency.
🗣️ JSW Paints’ Complaint Highlights
According to submissions by JSW Paints:
- Dealers reported “threats of termination of dealership agreements” if they sold JSW Paints products alongside Asian Paints.
- In certain regions, dealers faced non-supply of popular Asian Paints SKUs like Royale and Apex series for stocking rival brands.
- JSW alleged such practices are aimed at foreclosing market entry by new competitors, raising consumer prices and restricting innovation.
🏆 Asian Paints’ Response
In a regulatory filing to exchanges, Asian Paints stated:
“We strongly deny allegations of anti-competitive practices. Our dealer network is built on trust and free choice. We will fully cooperate with CCI’s investigation and remain committed to ethical business conduct.”
The company’s legal team emphasised that its dealership agreements do not impose exclusivity clauses and dealers are free to stock rival products.
💡 Impact On The Paints Industry
| Aspect | Potential Impact |
|---|---|
| Market competition | Investigation could create a more level playing field for JSW, Berger, Nerolac, Indigo, and regional brands. |
| Dealer bargaining power | May strengthen dealer autonomy in choosing multiple brands. |
| Asian Paints’ operations | Legal scrutiny could affect distribution policies and market conduct. |
| Consumer prices | Increased competition could lead to competitive pricing and more innovation in product lines. |
🔎 Recent CCI Actions In FMCG & Paints
| Year | Company Investigated | Outcome |
|---|---|---|
| 2020 | Grasim Industries (cement division) | Penalty of Rs 1,164 crore for cartelisation |
| 2022 | Maruti Suzuki | Penalty of Rs 200 crore for restricting dealer discounts |
| 2023 | Asian Paints | Preliminary complaint filed, closed after settlement assurances |
| 2025 | Asian Paints | Fresh investigation ordered for abuse of dominance |
🗣️ Analysts’ Views
Ajay Thakur, FMCG Analyst at Motilal Oswal:
“Asian Paints’ dominance comes from superior supply chain and branding, but if proven, such restrictive practices could tarnish its market leadership reputation.”
Rachana Desai, Competition Law Expert:
“Abuse of dominance is treated severely under Indian competition law. The CCI could impose fines up to 10% of average annual turnover for the past three years, apart from structural or behavioural remedies.”
🏦 Potential Outcomes Of The Probe
| Outcome | Impact On Asian Paints |
|---|---|
| Allegations dismissed | Status quo maintained, minor reputational damage |
| Penalties imposed | Financial hit and mandatory dealer policy changes |
| Structural remedies | Possible restrictions on dealer agreements, supply conditions, or marketing practices |
| Sectoral impact | Opens market for aggressive expansion by JSW Paints, Berger, and new entrants |
🔬 Why Paints Sector Matters For India’s Economy
The Indian paints industry is projected to grow at 11-13% CAGR, reaching Rs 1.2 lakh crore by FY30, driven by:
- Urbanisation and housing demand
- Infrastructure projects (bridges, metro lines, airports)
- Rural decorative paints penetration
Asian Paints, with its leadership position, is integral to this growth trajectory, making the outcome of this investigation crucial for overall industry dynamics.
📈 Asian Paints’ Financial Performance Snapshot (FY25)
| Parameter | Value |
|---|---|
| Revenue | Rs 36,800 crore |
| EBITDA | Rs 7,900 crore |
| EBITDA margin | 21.5% |
| PAT | Rs 5,300 crore |
| Dealer network | 75,000+ pan-India |
(Source: Asian Paints Annual Report FY25)
🔮 What’s Next?
- CCI’s Director General office will conduct detailed investigation, including dealer surveys, internal document reviews, and market impact assessments.
- Asian Paints will file its formal defence within 30 days.
- Final orders typically take 6-12 months, with hearings and possible interim measures if required to maintain market competition.
✅ Key Takeaways
- The Competition Commission of India has ordered a probe against Asian Paints for alleged abuse of market dominance, potentially reshaping competitive dynamics in the paints sector.
- Allegations include restricting dealer choice and foreclosing market access for rivals like JSW Paints.
- If proven, the company faces substantial penalties, operational changes, and reputational risks, while a dismissal could reinforce its market strategy credibility.
- The outcome will be keenly watched by consumers, dealers, investors, and rival manufacturers as India’s paints industry gears up for an intense growth phase over the next five years.
📌 Disclaimer
This news content is for informational and editorial purposes only. Data has been sourced from CCI orders, company filings, industry reports, and legal experts. Readers are advised to follow official CCI notifications and Asian Paints investor updates for the final regulatory positions and outcomes.
