Indian Antitrust Officials Raid Pernod Ricard Office Over Alleged Market Collusion

In one of the most significant crackdowns on the liquor industry in recent years, Indian antitrust authorities raided the Hyderabad office of French liquor giant Pernod Ricard in December. The investigation stems from allegations that the company colluded with retailers to boost its whisky sales at the expense of a competitor’s brand, according to a government document reviewed by Reuters.

The raid, conducted by officers from the Competition Commission of India (CCI), took place in Telangana state and was prompted by a complaint filed in 2022 by Indian spirits manufacturer Radico Khaitan. As reported by Reuters, Radico accused Pernod Ricard of orchestrating an arrangement with retailers to sideline Radico’s whisky in favor of Pernod’s offerings.

This investigation is the latest in a series of regulatory challenges facing Pernod Ricard in India, the company’s largest market by volume. Apart from the CCI probe, Pernod is also fighting a $250 million tax demand over alleged undervaluation of imports and is under scrutiny for its role in violations of New Delhi’s liquor policy.

Pernod Ricard, known for popular brands such as Chivas Regal and Absolut Vodka, has denied any wrongdoing. The company told Reuters that it remains committed to complying with Indian laws. “We are confident that we will demonstrate our good faith and compliance through the ongoing investigative process,” the company said in a statement. However, Pernod also noted that it was unaware of any specific government document outlining the details of the antitrust case.

Read more: Indian Antitrust Body Raids Alcohol Giants Amid Price Collusion Probe

According to the government document cited by Reuters, investigators uncovered evidence that Pernod Ricard India facilitated an anti-competitive agreement through a local marketing agency in Hyderabad. The agency allegedly made incentive payments to retailers to promote Pernod’s whisky brands. Retailers who agreed to sideline Radico Khaitan’s products were reportedly offered “special discounts” as part of the arrangement.

The CCI’s investigation found that these payments were coordinated by Pernod Ricard, with the government document stating that “incentives to retail licensees were being paid by Pernod … through its agent.” The agreement in question, according to the document, was described as undated and unsigned, but investigators concluded that Pernod played a key role in its execution.

As per Reuters, the CCI’s findings indicate that the arrangement was specifically designed to hinder Radico Khaitan’s ability to compete in the market. This comes at a time when India’s liquor sector is witnessing heightened regulatory scrutiny, particularly around issues of fair competition and compliance with local laws.

The ongoing investigation could have significant implications for Pernod Ricard’s operations in India, which is a critical market for the company. The country’s growing middle class and increasing demand for premium spirits have made India a strategic focus for global liquor brands.

With the CCI now deep into its probe, the case is likely to further intensify the challenges faced by Pernod Ricard in navigating India’s complex regulatory landscape.

Source: Reuters