Competition Commission of India

International Spirits and Wines Association of India v. Uttarakhand Agricultural Produce Marketing Board and ors.

19.07.2016

MRTP/ Competition Laws

CCI begins nosing around fishy Uttarakhand alcohol wholesaling

The Competition Commission of India ordered an investigation into claims that the State-owned wholesalers in Uttarakhand are indulging in one-sided and unfair contracts forcing the International Spirits an Wines Association of India to distribute under-demanded brands of alcohol.

International Spirits and Wines Association of India is a representative for international spirits and wines companies supplying their products in India. its members include Bacardi India, United Spirits Limited, Pernod and Diageo.

Its complaint concerning the sale and distribution of alcohol in Uttarakhand - managed exclusively by state-owned bodies - alleged that wholesalers were not placing for ‘Indian Made Foreign Liquor’ according to prevailing demand. Instead, procurement practices were arbitrary and discriminated against certain manufacturers, despite high demand for their products.

Moreover, contract terms pertaining to IMFL were onerous, such as empowering state bodies to terminate contracts without warning, impose penalties and obligating IMFL manufacturers to bear the cost of bottling, transporting and handling their products at specified depots.

Though the Commission was ambivalent about terming the entire liquor market in Uttarakhand to be the relevant market, it accepted that the State bodies would be dominant regardless its scope. It noted a decline in alcohol procured from certain IMFL brands: United Spirits Limited’s sales had fallen from 3,56,106 cases in August-October 2014 to 10,776 for the same period in 2015. Other brands had witnessed a similar and sudden slump. Despite an order of the Uttarakhand High Court, the authorities had not begun placing orders for IMFL commensurate to consumer demand.

Investigation by the Directorate General are expected to be completed within 60 days from the date of the order.

Tags : wholesale india made foreign liquor uttarakhand discrimination

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