Spools of thread feed into an embroidery machine. (Photographer: Taylor Weidman/Bloomberg)  

Competition Commission Orders Probe Against Grasim Industries

The Competition Commission of India has ordered a probe against Aditya Birla group firm Grasim Industries Ltd. for alleged abuse of dominant position with regard to the sale of viscose staple fibre.

The ruling has come following three separate complaints filed with the fair trade regulator. Since the “subject matter” of the three complaints was same, CCI had clubbed them and passed a common order.

After finding prima-facie evidence of competition norm violations, the regulator has directed its investigation arm – the Director General – to conduct an investigation against the company.

The allegations pertained to the conduct of Grasim Industries in imposing discriminatory conditions on sale of VSF, monitoring the customers by collecting details of their consumption, production and sales and practising unfair policies with respect to discounts offered, among others.

For the cases, the Competition Commission of India considered the market for “provision for sale of viscose stable fibre in India” as the relevant one.

In its order dated May 16, CCI observed that Grasim Industries is “offering various discounts/ incentives/ rebates, inter alia quantity discount, continuity discount, umbrella discount, comfort blend discount etc”.

Before giving discounts, the firm compels its customers to disclose information regarding their production capacities, list of their suppliers, buyers, their turnover, and balance sheet as a pre-condition for supply of VSF, CCI said.

Noting that Grasim Industries is able to impose such conditions on the VSF buyers owing to its “dominance in the VSF market in India”, CCI said the company appears to be "prima facie" violating the provisions of Section 4 of the Competition Act.

Section 4 pertains to abuse of dominant market position.

One of the complainants had alleged that the firm had arbitrarily withdrawn all sales terms (credits and discounts) agreed between the two parties and ultimately refused to supply VSF to it.

CCI said that the withdrawal of sales terms and discounts would leave the product of the complainant at a price point at which no takers would be available.

The complainant appears to be discriminated vis-à-vis similarly placed customers to whom discount is being provided by Grasim Industries, the regulator added.

“... nothing stated in this order shall tantamount to final expression of opinion on the merits of the case and the DG shall conduct the investigation without being swayed in any manner whatsoever by the observations made herein,” CCI said.

Under the Competition Commission of India (General) Regulations, the regulator had granted confidentiality over the identity of the three complainants, as per the order.

Also Read: VSF, Caustic Soda Prices To Remain Stable, Says Grasim Industries’ Group CFO

Stay Updated With Law & Policy News On BloombergQuint