CCI penalty on Grasim set aside by NCLAT, orders fresh hearing in VSF dominance case

The National Company Law Appellate Tribunal (NCLAT) set aside a Rs 301.6-crore penalty on Grasim Industries. NCLAT sent the matter back to the Competition Commission of India (CCI) for a fresh hearing. The case relates to alleged abuse of dominance in the viscose staple fibre (VSF) supply market to spinners in India.

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NCLAT said CCI did not give Grasim Industries a proper chance to respond. The tribunal noted this issue arose after CCI differed from the findings of its probe arm, the Director General (DG). NCLAT said such a disagreement required CCI to give notice and hear the company’s side.

NCLAT order on Grasim Industries CCI penalty

Grasim Industries had challenged a March 2020 CCI order before NCLAT. The tribunal acts as an appellate authority over CCI decisions. A two-member NCLAT bench said CCI had taken a view different from the DG. The disagreement concerned directions on disclosing discounting or pricing policy and sales to buyers who can trade VSF.

NCLAT referred to earlier judgments while explaining the need for a hearing. It said CCI failed to notify Grasim Industries about the points of disagreement. NCLAT said this omission denied the Aditya Birla Group firm an opportunity to defend itself against proposed action when the Commission moved beyond DG findings.

"We set aside the impugned order and remand it back to the Commission with a direction to provide an opportunity to the Appellant wherever the Commission differs with the findings of the DG and to decide the case expeditiously in a time-bound manner, NCLAT said.\"

NCLAT also stated it did not assess the case merits while issuing its directions. It said CCI should decide the matter independently after the rehearing. The tribunal added that the fair trade regulator should not be influenced by anything written in the NCLAT judgment while passing a fresh order.

Grasim Industries CCI case on VSF market dominance

CCI had imposed the penalty for alleged abuse of dominance in supplying VSF to spinners in India. CCI said Grasim Industries charged discriminatory prices to customers. CCI also said the company imposed supplementary obligations on buyers. The order directed Grasim Industries to stop unfair or discriminatory pricing practices.

CCI also told the company to avoid seeking VSF consumption details from buyers. The regulator further asked Grasim Industries to create a discount policy. CCI said the policy should be transparent and non-discriminatory for all market participants. It also directed the policy to be easily and publicly accessible or available.

The case followed a complaint alleging unfair business practices. The complaint named Association of Man Made Fibre Industry of India, Grasim Industries, Thai Rayon, and Indo Bharat Rayon. The three companies were stated as part of the Aditya Birla Group. NCLAT’s decision means CCI must hear Grasim again before taking further action.

VSF is described as a versatile, biodegradable, cellulosic fibre used in several products. It is widely used in fashion apparel, home textiles, and non-woven hygiene items. The fibre is known for soft texture, high absorbency, and good drape. It is often blended with cotton, polyester, or linen for comfort and durability.

With inputs from PTI