Liquor makers have approached the NCLAT against the CCI order

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The National Company Law Appellate Tribunal (NCLAT), the appellate authority, sent notices to the Kerala State Beverages Corporation (KSBC) and Travancore Sugar and Chemicals Limited (TSCL) on January 24.

Liquor companies CIABC and ADBVI have approached the NCLAT alleging that the Kerala State Beverages (Manufacturing and Marketing) Corporation has abused its dominance in the state.

The Confederation of Indian Alcoholic Beverages (CIABC) and the Association of Distilleries Breweries and Winners of India (ADBVI) in October 2020 rejected their applications and challenged an earlier order issued by the Competition Commission of India (CCI). There is no prima facie case.

The National Company Law Appellate Tribunal (NCLAT), the appellate authority, sent notices to the Kerala State Beverages Corporation (KSBC) and Travancore Sugar and Chemicals Limited (TSCL) on January 24. Issue notices to No. 2 (KSBC) and 3 (TSCL). Requirements including process fee will be filed within three days,” The NCLAT said in the order.

The appellate tribunal has set February 28 as the next hearing date.

Kerala State Beverages (Manufacturing and Marketing) Corporation is a Public Sector Undertaking with special control over the procurement, wholesale and retail sale of liquor in the state. In 2001, most of the retail outlets for the sale of liquor in Kerala had handed over to KSBC.

The Associations submitted to the CCI the entire supply chain, including the procurement and distribution of liquor, including Indian-made foreign liquor (IMFL), beer, wine, foreign-made foreign liquor (FMFL), and foreign-made wine (FMW). Kerala is under its control.

They alleged that KSBC periodically held tenders to purchase liquor, invited breweries to participate, and set the contract price unilaterally and unjustly.

Moreover, by abusing its dominant position, it exploits its monopoly position by imposing unfair and discriminatory prices and terms on private liquor manufacturers against government brands and by providing favorable prices, terms, and conditions for the purchase of TSCL products.

It was alleged that KSBC was prioritizing TSCL over its low wholesale margin, low cash discount, and preferred unloading at depots, thereby making private brands vulnerable to competition.

However, the CCI observed that several manufacturers were supplying multiple brands of liquor to KSBC, but rejected this, while TSCL only supplied one brand of rum.

The CCI also observed that the complainants could not prove how the competition, in general, was adversely affected when there were so many brands in the market.

“In the light of the facts and evidence in the document, based on the submissions of the parties, the allegations of misconduct made by the informants do not appear to be valid and no case can be stated as having violated the provisions of Section 4 of the Act.”, The CCI said.

The law refers to the Competition Act of 2002. Section 4 of the Act deals with the abuse of power.

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