The Supreme Court on Friday upheld an NCLAT order that set aside a ₹301.6 crore penalty imposed on Grasim Industries by the Competition Commission of India and directed the fair trade regulator to hear the Aditya Birla Group firm again over its alleged dominance in the viscose staple fibre market. According to reports from Business Standard, a bench comprising Justices J B Pardiwala and K Vinod Chandran dismissed the CCI's appeal challenging the May 5 NCLAT order. The tribunal had observed that the CCI did not provide a chance to Grasim Industries to present its arguments after it differed from the findings of the Director General (DG), the regulator's probe unit. The CCI had imposed the penalty on Grasim Industries in March 2020 for allegedly abusing its dominant position with respect to the supply of viscose staple fibre (VSF) to spinners in India.
The NCLAT had observed that the CCI did not provide a chance to Grasim Industries to present its arguments after it differed from the findings of the Director General (DG), the regulator's probe unit. As reported by Business Standard, the tribunal said that where there is a difference between the CCI and its DG, it 'requires the Commission to give opportunity to the opposite party' to defend itself against proposed actions. The NCLAT specifically noted that CCI had omitted to give notice to Grasim Industries regarding the disagreement and thereby deprived the Aditya Birla Group firm an opportunity to defend itself against the proposed actions. The tribunal cited previous judgments, stating that in such cases where there is a difference between the CCI and its DG, it 'requires the Commission to give opportunity to the opposite party' to defend itself against proposed actions. The CCI had imposed the penalty on Grasim Industries in March 2020 for allegedly abusing its dominant position in the market for supply of VSF to spinners in India by charging discriminatory prices from its customers, besides imposing supplementary obligations upon them.
The two-member National Company Law Appellate Tribunal (NCLAT) bench said the CCI itself has 'differed from the findings of the DG' regarding their directions for disclosure of discounting/pricing policy and sale to 'buyers' who can trade VSF. According to Business Standard, the tribunal set aside the impugned order and remanded 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. The tribunal made it clear that it has 'not commented on the merits of the case' while passing the order, and the CCI 'should not be influenced by anything contained in this judgement'. Grasim had challenged the order before the NCLAT, which is also an appellate authority over the CCI, asking the regulator to hear the matter afresh. The NCLAT also referred to the proviso inserted into Section 26(9) of the Competition Act, which came into force in September 2024 and expressly mandates the issuance of a show-cause notice before a final order is passed in such circumstances.
The CCI in its order had said that Grasim had abused its dominant position in the market for supply of VSF to spinners in India by charging discriminatory prices from its customers, besides imposing supplementary obligations upon them. As reported by Business Standard, the CCI directed the company to 'refrain from adopting unfair/discriminatory pricing practices and also refrain from seeking the consumption details of VSF from the buyers'. The watchdog also asked Grasim to put in place a discount policy, which is transparent and non-discriminatory to all market participants, and to make it easily and publicly accessible/available. The CCI had concluded that Grasim enjoyed a 97 per cent market share in the VSF market and contended that the appellate tribunal had conflated the concepts of buyers, traders and spinners. Despite the Director General (DG) in the investigation report finding that non-disclosure of pricing or discount policy did not amount to a violation of the Competition Act, the Commission directed Grasim to disclose its discount policy publicly and prohibited end-use restrictions on buyers.
VSF is a versatile, biodegradable, cellulosic fiber used widely in fashion apparel, home textiles and non-woven hygiene products, known for its soft texture, high absorbency and excellent drape. According to Business Standard, VSF is often blended with cotton, polyester or linen to enhance comfort, durability and fabric quality. The three companies involved in the case - Grasim Industries, Thai Rayon, and Indo Bharat Rayon - are part of the Aditya Birla Group, making this a significant case for the conglomerate's textile operations.
