The Competition Commission of India (CCI) has ordered a probe into Pernod Ricard on a complaint that the French liquor group breached antitrust rules by getting into exclusive deals with retailers in the national capital region to promote its brands at the cost of its rivals.
The antitrust investigation will also cover seven others with which Pernod had business dealings. They are Indo Spirits, Pathway HR Solutions, Universal Distributors, Khao Gali, Bubbly Beverages, Shiv Associates and Organomix Ecosystems, according to an order by the competition regulator.
The regulator has asked its director general (DG) for investigation to probe the case and submit a report in 90 days.
The complainant alleged that Pernod--which markets brands including Chivas Regal, Ballantine’s, The Glenlivet and Absolut vodka—“devised a cartel” with Indo Spirits and some retailers to raise its market share by mandating them to have 35% of stocks comprising its brands. In return, Pernod allegedly proposed corporate guarantees worth Rs 200 crore to help them get loans. Indo Spirits has retail presence through Khao Gali Restaurants, alleged the complainant identified in the order by his first name Mohit.
Based on its examination of facts and replies by the relevant parties, the regulator found a prima facie case of a violation of competition rules. It said consistent highest market shares enjoyed by Pernod Ricard over a span of five years through FY24 prima facie indicate a position of strength to cause appreciable adverse effect on competition.
“Accordingly, the Commission is of the prima facie view that purported arrangement entered into between Pernod Ricard and 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,” the regulator said in the order.
It also held that the “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”.
India is among Pernod’s largest markets in sales volume. In FY25, the liquor giant had reported sales of Rs 27,445 crore.
The CCI order also flags an e-mail dated July 13, 2021, shared among Pernod’s employees. The email spoke about Pernod “creating condition to have strategic advantage in 20 zones” in Delhi.
“Though talks are still evolving, but we are hopeful to get our close trade associates to go for aggressive bidding in 20 + zones. Out of these associates, we would like to provide financial support to four who will be bidding for eight zones (25% retail universe, 30% Delhi business),” the email said.
“Our support (23 million euros) would be 25% of the total investment by these associates" in the form of corporate guarantees for 3-year loans from the bank, it added.
While ordering the probe, the CCI, however, noted that "nothing stated in this order shall tantamount to a final expression of opinion on the merits of the case and the DG shall conduct the investigation without being swayed in any manner, whatsoever, by the observations made herein".
The antitrust investigation will also cover seven others with which Pernod had business dealings. They are Indo Spirits, Pathway HR Solutions, Universal Distributors, Khao Gali, Bubbly Beverages, Shiv Associates and Organomix Ecosystems, according to an order by the competition regulator.
The regulator has asked its director general (DG) for investigation to probe the case and submit a report in 90 days.
The complainant alleged that Pernod--which markets brands including Chivas Regal, Ballantine’s, The Glenlivet and Absolut vodka—“devised a cartel” with Indo Spirits and some retailers to raise its market share by mandating them to have 35% of stocks comprising its brands. In return, Pernod allegedly proposed corporate guarantees worth Rs 200 crore to help them get loans. Indo Spirits has retail presence through Khao Gali Restaurants, alleged the complainant identified in the order by his first name Mohit.
Based on its examination of facts and replies by the relevant parties, the regulator found a prima facie case of a violation of competition rules. It said consistent highest market shares enjoyed by Pernod Ricard over a span of five years through FY24 prima facie indicate a position of strength to cause appreciable adverse effect on competition.
“Accordingly, the Commission is of the prima facie view that purported arrangement entered into between Pernod Ricard and 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,” the regulator said in the order.
It also held that the “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”.
India is among Pernod’s largest markets in sales volume. In FY25, the liquor giant had reported sales of Rs 27,445 crore.
The CCI order also flags an e-mail dated July 13, 2021, shared among Pernod’s employees. The email spoke about Pernod “creating condition to have strategic advantage in 20 zones” in Delhi.
“Though talks are still evolving, but we are hopeful to get our close trade associates to go for aggressive bidding in 20 + zones. Out of these associates, we would like to provide financial support to four who will be bidding for eight zones (25% retail universe, 30% Delhi business),” the email said.
“Our support (23 million euros) would be 25% of the total investment by these associates" in the form of corporate guarantees for 3-year loans from the bank, it added.
While ordering the probe, the CCI, however, noted that "nothing stated in this order shall tantamount to a final expression of opinion on the merits of the case and the DG shall conduct the investigation without being swayed in any manner, whatsoever, by the observations made herein".
