NCLAT dismisses plea against KSBC, upholds CCI finding of no abuse of dominance in Kerala liquor procurement case.

May 20, 2026 : The National Company Law Appellate Tribunal (NCLAT) has dismissed an appeal filed by leading alcoholic beverage industry bodies challenging the Competition Commission of India’s decision to close a case alleging abuse of dominance by the Kerala State Beverages (Manufacturing and Marketing) Corporation Limited (KSBC). The tribunal held that the industry associations failed to produce sufficient material to establish even a prima facie case of anti-competitive conduct under Section 4 of the Competition Act, 2002.

In a detailed judgment delivered on May 20, 2026, a bench comprising Justice Mohammad Faiz Alam Khan and Technical Member Naresh Salecha upheld the CCI’s October 21, 2021 order passed under Section 26(2) of the Competition Act. The appellate tribunal concluded that the allegations made by the Confederation of Indian Alcoholic Beverage Companies (CIABC) and the Association of Distillers, Brewers and Vintners of India (ADBVI) were largely general in nature and unsupported by concrete documentary evidence.

The dispute arose from allegations that KSBC, which enjoys exclusive control over wholesale procurement and distribution of alcoholic beverages in Kerala, abused its dominant position by imposing unfair procurement prices, discriminatory tender conditions, delayed payments, and preferential treatment to state-owned liquor manufacturer Travancore Sugar and Chemicals Limited. The appellants argued that KSBC operated as a monopsony buyer, leaving private manufacturers with no meaningful alternative market access in Kerala.

The associations contended that KSBC unilaterally fixed purchase prices without meaningful negotiations and imposed one-sided contractual terms under its tender system. They further alleged that government-owned brands received preferential treatment in pricing, wholesale margins, cash discounts, and retail visibility, thereby distorting competition in the market for wholesale procurement and distribution of branded alcoholic beverages in Kerala.

Before the tribunal, the appellants argued that the CCI wrongly treated the preliminary stage under Section 26 of the Competition Act as if it were a final adjudication on merits. According to them, the competition regulator should have ordered a Director General investigation because sufficient material existed to disclose a plausible abuse of dominance. They relied on earlier competition law precedents and asserted that the CCI failed to exercise its statutory duty under Section 18 of the Act to prevent anti-competitive practices and protect market competition.

However, the CCI defended its decision by arguing that dominance alone is not prohibited under competition law and that the complainants had failed to establish abuse resulting in appreciable adverse effects on competition. The regulator pointed out that procurement prices were determined through a structured cost-based mechanism where manufacturers themselves submitted detailed cost sheets certified by chartered accountants. The CCI maintained that the appellants failed to furnish credible data showing actual losses, market exit of manufacturers, or any substantial impairment of competition.

KSBC and Travancore Sugar further argued that Kerala’s liquor distribution framework was rooted in public policy considerations and constitutional powers vested in the State under Entry 8 of List II of the Seventh Schedule. They emphasized that the corporation was established after the 1982 Vypin liquor tragedy to ensure safe distribution and prevent spurious liquor deaths. The respondents also relied on Article 47 of the Constitution, which directs the State to improve public health and reduce consumption of intoxicating substances.

The tribunal accepted the CCI’s reasoning that the appellants had not provided reliable evidence to substantiate claims of unfair pricing or losses suffered by manufacturers. Referring to the sample cost cards submitted before the regulator, the bench observed that they were merely illustrative and did not amount to concrete evidence capable of justifying a formal investigation.

NCLAT specifically noted that despite repeated opportunities before both the CCI and the appellate tribunal, the industry bodies could not furnish actual data on production costs, losses, decline in market share, or instances of manufacturers exiting the market due to KSBC’s procurement policies. The tribunal remarked, “The allegations levelled in the present case seems general allegations without substantiating material, documents or proof on record.”

On the issue of preferential treatment to the state-owned “Jawan Rum” brand manufactured by Travancore Sugar and Chemicals, the tribunal acknowledged that some preference had indeed been granted under Kerala’s state policy. However, it held that the appellants failed to demonstrate how such limited preference materially distorted market competition or impaired consumer choice. The bench observed that the state-owned distillery supplied only one rum product while numerous private manufacturers operated multiple liquor brands in Kerala.

The tribunal also examined allegations relating to differential cash discounts ranging from 7% to 22% and concluded that the structure appeared commercially justifiable because discounts varied depending on whether brands were fast-moving or slow-moving products. The appellants, according to the tribunal, failed to show that these discounts caused actual competitive harm or discriminatory market exclusion.

Importantly, the judgment reiterates a significant principle under Indian competition law that mere dominance is not illegal unless accompanied by abusive conduct producing appreciable adverse effects on competition. NCLAT relied heavily on the Supreme Court’s ruling in CCI v. SAIL and its own earlier decision in Manoj K. Sheth v. Secretary, CCI, emphasizing that the competition regulator is not obligated to order investigations in the absence of credible prima facie material.

The bench further observed that informants approaching the CCI have a corresponding duty to conduct reasonable due diligence and provide complete information supported by data and documentary proof. According to the tribunal, the Competition Act and Competition Commission regulations require complainants to file “holistic information” rather than speculative or incomplete allegations.

In its concluding findings, the appellate tribunal held that there was no error in the CCI’s decision to close the case at the preliminary stage under Section 26(2) of the Competition Act. The appeal was accordingly dismissed without costs.

The ruling is significant for competition law enforcement in heavily regulated sectors such as liquor distribution, where state policy, public interest considerations, and constitutional mandates intersect with market competition concerns. The judgment also signals that industry bodies challenging state-controlled procurement systems before competition regulators will need to provide detailed economic evidence demonstrating actual anti-competitive harm rather than relying solely on allegations of market dominance.

Case Reference : Confederation of Indian Alcoholic Beverage Companies & Anr. v. Competition Commission of India & Ors., Competition App. (AT) No. 04 of 2022