CCI Launches Investigation into TASMAC for Alleged Abuse of Dominance: What You Need to Know

The Competition Commission of India (CCI) has launched a comprehensive investigation into the Tamil Nadu State Marketing Corporation (TASMAC) over allegations of monopolistic practices that restrict market access for specific beer brands in the state. Following initial findings that suggest potential violations, the CCI has tasked its director general with delving deeper into the matter.

Allegations Against TASMAC

According to the CCI’s detailed 12-page order, TASMAC—a government-owned entity with a monopoly on liquor sales in Tamil Nadu—has reportedly shown favoritism towards certain beer brands during its procurement process. The commission noted that brands from Kals Breweries and SNJ Breweries, including British Empire, SNJ 10000, and Black Pearl, have dominated procurement figures over the past three years, overshadowing competitors, with only a few exceptions like Kingfisher and Zingaro.

Key Findings:
- Dominance of Specific Brands: Brands like Kals Breweries and SNJ Breweries have seen their market share soar.
- Procurement Strategies: The CCI raised concerns over TASMAC’s method of calculating orders, which seems to favor brands that have previously performed well, thereby entrenching existing market dynamics.

Procurement Practices Under Scrutiny

Despite TASMAC’s assertion that it employs a weighted average sales method to determine monthly orders of beer and Indian Made Foreign Spirits (IMFS), the CCI expressed skepticism. The current system appears to reward brands based on past performance, potentially hindering new entrants from gaining traction.

Observation: The formula used for procurement may reinforce previous sales trends, limiting diversity in available beer brands.

According to TASMAC’s publicly available price list, out of 38 beer brands from six suppliers, only a handful, including Tuborg, Carlsberg, Kingfisher, and Fosters, are well-known. Alarmingly, 21 of these brands come from just three manufacturers—United Breweries (13 brands), Kals Breweries (8 brands), and SNJ Breweries (8 brands).

Market Share Trends

The commission highlighted a significant increase in the combined market share of Kals Breweries and SNJ Breweries over recent years:

40.22% in 2021-22
58.41% in 2022-23
56.76% in 2023-24

This upward trajectory raises concerns about the competitive landscape within Tamil Nadu’s beer market.

Conclusion

Established in 1983, TASMAC operates more than 5,000 retail outlets, holding exclusive rights to sell alcoholic beverages in Tamil Nadu. As the investigation progresses, the implications for both TASMAC and the broader beer market could be profound, potentially reshaping the competitive dynamics of liquor distribution in the state.

For further insights into market trends, consider exploring related articles on revenue growth in various sectors, including the cables and wires industry and cement production.