Pernod Ricard, the French drinks giant, is under investigation by India’s competition watchdog, the Competition Commission of India (CCI), for allegedly colluding with retailers in Telangana state to harm its competitors, according to regulatory documents obtained by Reuters. This probe poses a new regulatory challenge for Pernod Ricard in one of its key markets.
The CCI has been actively pursuing the case since early this year, following a review of the allegations filed by Pernod’s Indian rival, Radico Khaitan. The CCI found merit in Radico’s claims, prompting the investigation. While specific details of the case have not been publicly disclosed due to CCI’s policy on collusion cases, the source mentioned that Pernod and retailers could be summoned, documents requested, or even search and seizure operations conducted.
Radico Khaitan accused Pernod of violating India’s antitrust laws by entering into agreements with retailers that offered “additional discounts and benefits” if they refrained from selling Radico’s 8PM whisky brand. As part of the alleged agreements, Pernod requested retailers to ensure a 70% share for its Royal Stag whisky brand, referred to as the “Royal Stag Agreement” in Radico’s case.
Pernod Ricard responded to Reuters, stating that it has not been notified of the matter by any competent authority. The company emphasized its commitment to complying with the laws of the country and instructing its teams to do the same.
Radico Khaitan and the CCI have not provided comments on the matter at this time.
Pernod Ricard holds a significant market share in India’s spirits market, with brands such as Royal Stag and Chivas Regal. According to Euromonitor, the company’s market share is nearly 19%, while Radico Khaitan’s market share stands at 6.6%, with brands including Magic Moments and 8PM.
This antitrust probe adds to Pernod Ricard’s existing regulatory challenges in India. The company has previously failed to obtain a license to sell its brands in the capital city, New Delhi, after being accused by India’s financial crime agency of violating the city’s liquor policy to illegally boost market share. Pernod Ricard denies any wrongdoing in this case. Additionally, the company is facing a federal tax demand of nearly $250 million for undervaluing certain liquor imports, which it has legally contested.
In the CCI case, Radico alleges that Pernod’s market share significantly increased in Telangana after entering into agreements with retailers, rising from 53% in January 2022 to 100% in March 2022 in some shops. Conversely, Radico’s 8PM brand allegedly experienced a decline in market share from 47% to 0% in certain shops, as stated in the government case document.
This is not the first time Pernod Ricard has faced allegations of illegally boosting its market share. In the Delhi liquor case, the Indian federal agency accused the company of offering corporate guarantees to retailers in Delhi and requesting them to stock at least 35% of its brands in their shops. Pernod Ricard denies these allegations as well.