CCI imposes Rs 302 cr penalty on Grasim Industries; company abuses dominant position in supply of staple fibre to spinners

The Competition Commission has slapped a penalty of Rs 302 crore on Grasim Industries for abusing its dominant position with respect to the supply of a certain staple fibre to spinners

Press Trust of India March 17, 2020 12:17:50 IST
CCI imposes Rs 302 cr penalty on Grasim Industries; company abuses dominant position in supply of staple fibre to spinners

New Delhi: The Competition Commission has slapped a penalty of Rs 302 crore on Grasim Industries for abusing its dominant position with respect to the supply of a certain staple fibre to spinners.

Besides, the company has been directed to "cease and desist" from indulging in anti-competitive practices as well as put in place a transparent "discount policy" for all the market participants.

In a 60-page order, the Competition Commission of India (CCI) said the company has abused its dominant position in the market for the supply of VSF to spinners in India by charging discriminatory prices to its customers, besides imposing supplementary obligations upon them.

These are in violation of competition norms, it added.

CCI imposes Rs 302 cr penalty on Grasim Industries company abuses dominant position in supply of staple fibre to spinners

Rupee. Representational image. Reuters

VSF is Viscose Staple Fibre (VSF) and is produced as well as sold by Grasim Industries.

"While the company is yet to receive the order of the CCI, it believes that on merits it has sufficient grounds for an appeal," the company said in a filing to the stock exchanges on Monday.

The CCI has directed the company to "refrain from adopting unfair/discriminatory pricing practices and also refrain from seeking the consumption details of VSF from the buyers".

Further, the watchdog has asked Grasim Industries to put in place a discount policy which is transparent and non-discriminatory to all the market participants, and to make it easily and publicly accessible/available.

"It is made clear that OP-2 (Grasim Industries) shall not place any end-use restriction on the buyers of VSF and it would be open to them to use the same for spinning or trading or any other purpose, as permissible under law," the order said.

A penalty of Rs 301.61 crore has been imposed on the company, an amount that is equivalent to 5 percent of its average turnover from the relevant market from 2014-15 to 2016-17. The market for the supply of VSF to spinners in India is the relevant one.

A complaint alleging unfair business practices was filed against the Association of Man-Made Fibre Industry of India, Grasim Industries, Thai Rayon and Indo Bharat Rayon. The three companies are part of the Aditya Birla Group.

According to the Commission, Grasim Industries imposed supplementary obligations upon the spinners which by their very nature or according to commercial usage, have no connection with the subject of such contracts.

"... the Commission has no hesitation in holding that OP-2 has abused its dominant position in the relevant market instead of behaving as a responsible corporate citizen which is expected to comply with the special and differential obligations of a dominant undertaking," it noted

Updated Date:

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