CCI Orders Probe Into Pernod Ricard, Others Over Alleged Anti-Competitive Conduct In Delhi Liquor Market

The Competition Commission of India (CCI) recently ordered an investigation into alleged anti-competitive arrangements between Pernod Ricard, the multinational spirits and wines company behind brands such as Royal Stag, Blenders Pride, and Chivas Regal, and a set of wholesalers and retailers in Delhi's liquor market under the now-scrapped Delhi Excise Policy, 2021-22.

“In view of the foregoing, the Commission is of the prima facie view that the restrictive conduct by Pernod Ricard with its retailers/wholesalers, purportedly, to induce brand pushing and achieve higher market share in IMFL market in Delhi, falls within the purview of 'exclusive dealing agreement' as defined in Section 3(4)(b) of the Act read with Section 3(1) of the Act and therefore be investigated for plausible contravention under the provisions of the Act.”

A coram of Chairperson Ravneet Kaur, Members Anil Agrawal, Sweta Kakkad, Deepak Anurag passed the order.

The case arose from information filed by an individual alleging cartelisation, bid rigging and anti-competitive conduct by several liquor manufacturers, wholesalers and retailers, including Pernod Ricard, United Spirits (Diageo) and Bacardi.

The informant alleged that tenders issued by the Delhi Excise Department in 2022 for wholesale supply of country liquor in the National Capital Territory of Delhi were manipulated through collusive practices.

The first tender dated April 22, 2022 was cancelled after two participants disclosed their financial quotes in violation of tender conditions.

A second tender dated May 24, 2022 was also cancelled after the Excise Department observed that bidders had quoted prices within a narrow band of Rs 421 to Rs 423, prima facie suggesting possible pooling.

The informant further alleged that in a third tender issued in January 2023, bidders again quoted prices in a closely similar range. The informant also relied on Excise Department records noting that largely the same set of distillers and bottlers repeatedly participated in such tenders.

Apart from bid-rigging allegations, the information also alleged cartelisation and exclusive arrangements during implementation of the Delhi Excise Policy, 2021-22 in relation to Indian Made Foreign Liquor.

It was alleged that manufacturers used the International Spirits and Wines Association of India platform to decide wholesalers and other strategies to avoid competition on merit.

The informant alleged that Pernod Ricard entered into arrangements with Indo Spirits and certain retailers to increase its market share through brand pushing, corporate guarantees and discriminatory credit notes.

The informant also alleged that certain retailers used common IP addresses while placing orders on the Excise Supply Chain Information Management System portal. According to the informant, this indicated concerted action.

On the bid-rigging allegations, the Commission rejected a prima facie case.

“Upon perusal of the material available on record, the Commission is of the view that there is insufficient information to indicate a prima facie case of bid rigging in relation to tenders invited by the Excise Department for the grant of licence for wholesale supply of country liquor.”

The Commission similarly said there was insufficient material at this stage to indicate a prima facie case of bid rigging in relation to IMFL tenders.

On the conduct under scrutiny, the Commission said,

“The Commission is of the view that the alleged conduct of Pernod Ricard, i.e., indulging in concerted behaviour with some retailers/wholesalers, thereby inducing them to push its brands, purportedly, to achieve higher market share, concomitantly with offering corporate guarantees, is a conduct falling within the realm of exclusive dealing agreement as defined in Section 3(4)(b) of the Act”

The Commission identified the relevant market as the market for sale and supply of IMFL in Delhi.

It said the alleged arrangements could distort supply and influence consumer preference. It added that this could restrict consumer choice by pushing products that are more readily available.'

Accordingly, it directed the Director General to investigate the matter under Section 26(1) of the Competition Act.