On September 19, 2022, pursuant to complaint filed by International Spirits and Wines Association of India (‘ISWAI/Informant’), the CCI dismissed allegations of abuse of dominance under Section 4 of the Competition Act against Prohibition & Excise Department, Government of Andhra Pradesh (‘PED’) & Andhra Pradesh State Beverages Corporation Limited (‘APSBCL’) (collectively, ‘OPs’).^[1]

ISWAI alleged that:

1. PED and APSBCL are abusing their powers in an arbitrary and exploitative manner to impose unfair commercial terms on manufacturers/suppliers.
2. PED and APSBCL not engaging in the procurement of branded alcoholic beverages on an objective basis.
3. PED’s and APSBCL’s conduct is leading to discriminatory treatment and significant commercial loses for manufacturers/suppliers of Branded Alcoholic Beverages (ISWAI members/Informant’s members) and severe reduction of supply of beverages to consumers of their choices/demanded beverages.
4. Imposition of unfair, discriminatory, and onerous terms and conditions in Rate Contract Agreements (RCAs) on ISWAI members.

The CCI in its analysis, based on the evidence on record, delineated the relevant market as “market for the wholesale procurement, distribution and retail sales of branded alcoholic beverages in the State of Andhra Pradesh”. With respect to the issue of dominance of the APSBCL, the CCI noted that APSBCL has the sole right of wholesale procurement, distribution of alcoholic beverages and of retail sales of alcoholic beverages in the State of Andhra Pradesh based on the excise policy of the State. Therefore, the CCI is of the prima facie view that APSBCL is dominant in the relevant market.

With regards to the allegations of abuse of dominance – through arbitrary procurement of alcoholic beverages by the PED and APSBCL – the CCI analysed the indents raised by certain members of Informant on PED and APSBCL, Offer for Supply (‘OFS’) issued by OPs against the said indents, sales figures and market share of Informant’s members. In this regard, the CCI observed that both the parties have provided monthly data of total indents raised as well as OFS issued by PED and APSBCL on Diageo India and Pernod India across all brands which are similar.

The CCI further noted that although there is some variance in the data provided by the Informant, the PED and APSBCL with respect to indent raised and OFS issued, the trend of data provided by the Informant, the PED and APSBCL is almost similar. The CCI opined from the data that the Informant’s members themselves have been placing smaller indent quantities on the OPs for several months. Furthermore, the submission of the PED and APSBCL with respect to indent and OFS quantities issued by PED and APSBCL indicates that there has been a reduction in the quantities offered by the suppliers.

The CCI also noted that in the absence of any evidence whatsoever, the assertion of the Informant that PED and APSBCL orally instructed them to supply less than OFS is not tenable. Further, the CCI observed that the Informant or its members have not made any complaints at any forum until now with regard to the instruction/ irregularity by PED and APSBCL.

Additionally, the CCI addressed the reliance placed on Case No. 2 of 2016 by the Informant, where the CCI concluded that in the case the CCI had evidence on record that one of the OPs was not placing any orders even when indents were raised. As a result, the wholesale procurement did not match the retail demand in the case relied on by the Informant. However, in the instant case, OFS were properly raised/issued by OPs coherently for a significant amount of time, and as mentioned by the OPs, it was the Informant’s members who were unable to deliver the OFS quantity for several months. Therefore, the CCI concluded that the Informant cannot rely on the judgement.

For ISWAI’s argument that its members faced a declining market share, the CCI observed that there is no concrete evidence to suggest that such decline in market share is due to the alleged anti-competitive conducts of the PED and APSBCL. The same, as per the CCI, may be attributed to various reasons, such as change in state policies, Covid-19 pandemic, change of customer preferences and entry of new competitors/brands in the industry.

Regarding the allegations that various clauses of RCA are unilateral and unfair, the CCI noted that PED and APSBCL have stated that conditions in the RCA are not unilateral and that PED and APSBCL cannot control and artificially manipulate the demand/supply conditions of alcoholic beverages in the State of Andhra Pradesh. Having regard to the submission of PED and APSBCL and the fact that the main allegation relating to violation of competition law, made against the PED and APSBCL, has not been found to be sustainable, the CCI did not deem it necessary to deal with allegations qua other clauses of RCA.

Accordingly, the CCI dismissed the complaint.

[1] Case No. 45 of 2021.