After ED, CCI starts probe into TASMAC over anti-competitive practice in beer sales

The Competition Commission of India (CCI) has directed an investigation by its Director General into the Tamil Nadu State Marketing Corporation Limited (TASMAC) over allegations of anti-competitive practices in the sale of beer brands in the State..The order was passed on March 25 under Section 26(1) of the Competition Act, 2002 following a complaint filed by Chakra R Prabakaran, who accused TASMAC, the State-run liquor distribution corporation, of favoring select breweries and restricting consumer choice.."In consideration of the facts and circumstances of the present case, the Commission is of the prima facie view that TASMAC appears to be abusing its dominant position by limiting market access to certain brands of beer in the state of Tamil Nadu in contravention of Section 4(2)(c) of the Act. On the basis of the material available on record, there appears to be substance in the allegations levelled by the Informant and the same merits investigation by the Director General (‘DG’)," the order said. .The informant alleged that TASMAC, which holds a monopoly over liquor retail in Tamil Nadu through its 5,000+ outlets, disproportionately stocks brands like SNJ 10000 and British Empire from SNJ Breweries and Kals Breweries, while neglecting other available brands. A white paper by Tamil Nadu BJP president K Annamalai, cited as evidence, claimed that only 4 to 5 of the 46 registered beer brands are widely available, raising concerns about anti-competitive collusion..The CCI took cognisance of the complaint and sought responses from TASMAC in June 2024 regarding its beer procurement policies and the market share of various brands over the past three financial years. TASMAC defended its procurement process, stating that it follows a weighted average sales calculation method using an automated system to determine beer orders. The corporation asserted that its policies are impartial and based solely on consumer demand and stock availability..Despite this defense, the CCI noted that TASMAC’s dominant position in Tamil Nadu’s liquor distribution system effectively allows it to operate without competitive pressures. Further, reports from the public domain, including a Times of India article from May 2023, highlighted the limited availability of popular beer brands in TASMAC outlets..Despite this defense, the CCI noted that TASMAC’s dominant position in Tamil Nadu’s liquor distribution system effectively allows it to operate without competitive pressures. .The CCI, after reviewing available data, acknowledged that TASMAC's exclusivity in liquor distribution creates significant market barriers. Citing a 2014 Madras High Court judgment, the commission emphasized that consumers should have the right to choose from a wider range of brands rather than being limited by a monopolistic distributor."On analysis of the data furnished by TASMAC regarding brand-wise and manufacturer-wise procurement of beer in the last 3 financial years, it is observed that the share of brands of two manufacturers i.e Kals Breweries Pvt. Ltd. and SNJ Breweries Pvt. Ltd. such as ‘British Empire’, ‘SNJ 10000’, ‘Black Pearl’, ‘High Voltage’ etc. is significantly higher compared to other brands (with the exception of Kingfisher and Zingaro) in TASMAC’s procurement in the last three financial years. It is also observed that the combined share of Kals Breweries Pvt. Ltd. and SNJ Breweries Pvt. Ltd. has significantly increased in the last three financial years, from 40.22% in 2021-22, to 58.41% in 2022-23 and 56.76% in 2023-24," the order said. .CCI further found that despite 38 brands listed on TASMAC’s website, outlets predominantly stock a handful, contravening a 2014 Madras High Court directive urging "a-la-carte" availability to respect consumer preference.."Therefore, it appears from the data provided by TASMAC that only a few brands dominate the share of its procurement of beer, and the well-known brands in TASMAC price list command a significantly lower share in procurement," the CCI said. .It thus directed the DG to conduct a 60-day investigation to determine whether TASMAC abused its dominant position. The DG will scrutinise procurement policies, brand-wise sales data and manufacturer agreements.The TASMAC is also currently being probed by the Enforcement Directorate (ED) which had raided its premises between March 6 and March 8. The ED has alleged financial irregularities amounting to over ₹1,000 crore, citing issues such as tender manipulations, unaccounted cash transactions and overpricing at retail outlets.A petition filed by TASMAC against the same is currently pending before the Madras High Court..[Read Order]