Competition Commission orders probe against Pernod Ricard, 7 others

The Competition Commission has ordered a detailed probe against French spirits major Pernod Ricard and seven other entities for alleged cartelisation in the Indian-made foreign liquor market.

The seven entities that have come under the watchdog’s lens are Indo Spirits, Pathway HR Solutions, Universal Distributors, Khao Gali, Bubbly Beverages, Shiv Associates and Organomix Ecosystems.

Ordering the investigation, the regulator said it is of prima-facie view that Pernod Ricard’s restrictive conduct with its retailers/wholesalers, purportedly, to induce brand pushing and achieve higher market share in the IMFL market in Delhi, falls within the purview of ‘exclusive dealing agreement’ under the Competition Act.

Such conduct violates the Act, according to a 26-page order, dated May 5, by the Competition Commission of India (CCI).

The complaint was filed before the CCI in 2024.

CCI’s Director General (DG) will carry out the investigation that will also look into the role of the persons/officers who were responsible for the conduct of the activities of such entities as well as individuals whose consent or connivance was involved during the time of the contraventions.

India is the largest market by volume and second-largest by value for Pernod Ricard, which owns popular brands such as Absolut, Chivas Regal, and Glenlivet.

With regard to the allegation that retailers are offered a corporate guarantee, purportedly, to achieve high market shares for Pernod Ricard, the regulator said such conduct is likely to adversely impact competition.

Non-dealing in the product of the competitors through vertical arrangements between Pernod Ricard and retailers is likely to result in distortion of demand by way of moving retail demand away from the competing brands to Pernod Ricard, artificially, thereby leading to a situation of driving existing competitors out of the market, as per the order.

“... where the retail demand is distorted through an arrangement between Pernod Ricard and retailers to augment the business of Pernod Ricard, such an action is likely to result in restriction of choice to end consumers rather than benefit them in any manner,” it said.

The watchdog also said it was of the prima facie purported arrangement entered into between Pernod Ricard and a few retailers may result in distortion of supply, which can eventually translate into distortion of demand, with end consumers switching preference to the product available in supply.

Broadly, there were two sets of allegations -- manufacturers of country liquor/IMFL entering into bid rigging in the tenders invited by the Delhi Excise Department and cartel formation amongst liquor manufacturers, wholesalers and retailers in Delhi in the context of the Excise Policy, 2021-22.

The CCI said there was insufficient information to indicate a prima facie case of bid rigging in the tenders.

To assess the cartelisation complaint, the regulator considered ‘market for sale and supply of IMFL in the NCT of Delhi’ as the relevant one.

The complaint was filed against 41 entities. After assessment, CCI found that allegations of contravention remained unsubstantiated against 34 entities under Section 3 of the Competition Act and ordered the probe against seven entities.

Section 3 pertains to anticompetitive agreements.