CCI to probe Chadha group firms for unfair biz practices

New Delhi: Competition Commission has ordered a probe against Chadha Holdings and its four group entities for alleged abuse of dominant position with respect to procurement of country liquor in Uttar Pradesh.

The group is run by Chadha family and is mainly into real estate and liquor businesses. The group's then head Ponty Chadha was killed in a shoot out in November 2012.

After finding prima-facie case of violations of competition norms, the fair trade watchdog will probe Chadha Holdings Pvt Ltd as well as the four group entities — Flora and Fauna Housing & Land Developments Pvt Ltd, Patiala Kings Liquor Pvt Ltd, Royal Beverages Pvt Ltd and Kiwi Wines and Beverages Pvt Ltd.

Chadha Holdings is the holding company for Chadha Group, as per information mentioned in the Competition Commission of India (CCI) order.

It was alleged that the five entities indulged in discriminatory procurement of country liquor from either their own distilleries or some favoured distilleries or manufacturers. Another allegation was denial of market access to other distillers and manufacturers.

The regulator has ordered a detailed investigation by its probe arm — Director General — on a complaint filed by Star Bruchem Ltd, formerly known as Narang Distillery.

Before calling for the probe, the CCI heard the parties in the matter.

In a 17-page order, the CCI said it is of the view that the reasons given by the entities "appear to be merely an attempt to subvert the fact that procurement from various distillers/ manufacturers was being made by them in an arbitrary and discriminatory manner".

This resulted in "denial of market access to certain distillers/ manufacturers like the informant (Star Bruchem)," it added.

According to the CCI, each of four entities have been procuring country liquor from more than one distillery. However, around 25 to 55 per cent of the procurement by the entities in this period was from two distilleries — Wave Distilleries and Breweries Ltd, and Lords Distilleries — which are group companies of Chadha Holdings.

It is based on the data for the 2011-12 to 2016-17 period.

Such trend of procurement by the four entities shows that they are giving preference to these two distilleries over other distillers or manufacturers, the regulator said, adding that they have not been able to provide any plausible justification for according such preferential treatment.

Apart from probing the complaint, the CCI will also investigate allegations that the five entities, including Chadha Holdings, being a group and contravening the provisions of Section 4 of the Competition Act.

Section 4 pertains to abuse of dominant position.

Besides, the watchdog will probe the role of the persons or officers who were in-charge of and responsible for the conduct of the businesses of such parties at the time of the alleged contravention.