CCI Investigates Pernod Ricard Amid Collusion Allegations

CCI Investigates Pernod Ricard Amid Collusion Allegations. Image/Reuters

Collusion Allegations Surface in Telangana

The Competition Commission of India (CCI) has initiated an investigation into French beverages giant Pernod Ricard. The probe follows allegations that the company engaged in collusion with retailers in the southern state of Telangana, to the detriment of its competitors. These allegations came to light when Indian competitor Radico Khaitan filed a complaint.

Antitrust Violations and Retailer Incentives

Radico Khaitan’s complaint accuses Pernod of violating Indian antitrust laws. It alleges that Pernod offered retailers additional discounts and benefits in exchange for refraining from selling Radico’s 8PM whisky. Moreover, Radico contends that Pernod required these retailers to allocate a substantial 70% of their shelf space to Pernod’s Royal Stag whisky brand, a violation of what’s known as the “Royal Stag Agreement.”

Pernod’s Response and Legal Compliance

Pernod Ricard, however, maintains that it has not been officially informed of the investigation by CCI. The company asserts its unwavering commitment to adhering to all legal requirements and standards.

Past Regulatory Challenges for Pernod in India

This isn’t the first regulatory hurdle that Pernod has encountered in the Indian market. Previously, the company faced accusations from the Indian financial crime agency, suggesting that it had contravened Delhi’s liquor policies to illicitly bolster its market share. Pernod vehemently denies these allegations. Additionally, the company is contesting a substantial federal tax demand, amounting to nearly $250 million, related to the undervaluation of specific liquor imports.

Market Share Dynamics in Telangana

The CCI’s investigation was prompted by Radico’s claims that Pernod’s market share in Telangana witnessed a significant upswing following its agreements with local retailers. This surge reportedly saw Pernod’s market share soar from 53% in January 2022 to a remarkable 100% in March 2022 in some retail outlets. Conversely, Radico alleges that its own market share plummeted from 47% to a shocking 0% in select establishments during the same period.

Pernod’s Resilience in the Indian Spirits Market

Despite these challenges and legal disputes, Pernod Ricard continues to maintain a substantial share of the Indian spirits market. Recognized brands such as Royal Stag and Chivas Regal contribute to the company’s nearly 19% market share in India’s $31 billion spirits industry.