India’s competition watchdog has initiated an investigation into Pernod Ricard, following allegations of collusion with select retailers in a southern state. This purported collusion is suspected to have been carried out to undermine competitors, as indicated by regulatory documents. This represents the latest challenge for the prominent French beverage giant within a crucial market.
According to an insider with firsthand information, the Competition Commission of India (CCI) has been actively investigating this issue since the beginning of the year. This action followed a thorough review by senior CCI members of the case filed by Pernod’s Indian competitor, Radico Khaitan, which they found to have valid merit.
Consistent with the policy of the CCI, specific case details involving collusion among parties are not disclosed to the public. Furthermore, the source noted that the CCI possesses the authority to summon Pernod Ricard or the retailers involved, request relevant documents, and even carry out search and seizure operations as part of its investigation.
Radico Khaitan has accused Pernod Ricard of breaching India’s antitrust regulations by engaging in agreements with retailers located in the state of Telangana. These agreements allegedly provided “extra discounts and incentives” to retailers in exchange for refraining from selling Radico’s 8PM whisky brand.
According to a government case document examined by Reuters, Pernod Ricard supposedly requested these retailers to guarantee a 70% share of their shop’s shelf space for its Royal Stag whisky brand. Radico Khaitan’s case asserted that this arrangement was referred to as a “Royal Stag Agreement.”
Pernod in a statement to Reuters said it has “not been notified of the matter … by any competent authority”.
“Pernod Ricard India is committed to comply with the laws of the country and we instruct and educate our teams to do the same,” it added.
Requests for comment from Radico Khaitan and the CCI have gone unanswered.
Reuters is first to report details of Radico’s allegations and the status of the investigation.
In addition to Royal Stag, Pernod also boasts popular brands such as Chivas Regal, and Euromonitor reports that the company holds an approximately 19% share in India’s $31 billion spirits market. On the other hand, Radico Khaitan commands a market share of 6.6%, featuring brands like Magic Moments and 8PM.
The most recent CCI case further compounds Pernod’s regulatory difficulties in India. The company has faced hurdles in obtaining a license to distribute its brands in the capital city of New Delhi. This setback stems from allegations by India’s financial crime agency last year, which accused Pernod of unlawfully manipulating the city’s liquor policy to illegitimately enhance its market share. Pernod vehemently refutes any allegations of wrongdoing.
Additionally, Pernod Ricard is confronting a federal tax claim of nearly $250 million related to the alleged undervaluation of specific liquor imports. The company has initiated legal proceedings to challenge this tax demand.
Within the CCI case, Radico Khaitan contends that Pernod Ricard’s market share experienced a substantial increase following its agreements with retailers in Telangana. As per the government case document, this surge elevated the market share from 53% in January 2022 to a complete 100% in March 2022 in certain shops.
According to the document, Radico Khaitan claimed that the market share of its 8PM brand in certain shops dropped from 47% to 0%.
Pernod has been accused of unlawfully enhancing its market presence in the Delhi liquor case. According to the Indian federal agency in question, the French company allegedly provided corporate guarantees to select retailers in Delhi, and in exchange, requested them to maintain a minimum inventory of 35% of its brands in their stores. However, Pernod denies these allegations.