NEW DELHI, May 1 (Reuters) - From antitrust cases to accusations of illegally boosting market share, French liquor giant Pernod Ricard faces business and regulatory challenges in India, which it rates as one of its most crucial markets in the world.

The maker of Chivas Regal and Absolut vodka is the second-largest spirits company globally and in India, where it accounts for 17% of the alcohol market by volume, and its competitors include Diageo, IWSR Drinks Market Analysis says.


India's competition watchdog is reviewing accusations that Pernod colluded with retailers in the Indian capital of New Delhi to boost market share. The watchdog can order a full-blown investigation if the claims are borne out.

Last year, the watchdog ordered an investigation of Pernod for colluding with some retailers in a southern state by offering discounts to abstained from selling a rival's brand.


Since 2022 Pernod has faced scrutiny by India's Enforcement Directorate in an investigation of how retailers, manufacturers and politicians are alleged to have colluded to illegally profit from the 2021 auction of liquor retail licences in New Delhi.

The capital's liquor policy barred manufacturers from participating in retail sales, directly or indirectly. Pernod was "in contravention" as it effectively used bank guarantees to invest in retailers, the agency says.

The agency also accuses Pernod of illegally making profits of $23 million by giving false price information to Delhi authorities.

Pernod has strongly denied the allegations.


In April 2023 New Delhi authorities rejected Pernod's application to renew its liquor sale licence, citing investigations into the company. Pernod told a Delhi court it had been suffering "massive losses" as its brands were not available in the city.

Pernod challenged the rejection by city authorities and has previously said it is keen to restart supplies.


Pernod faces a federal tax demand for nearly $250 million in a dispute over valuation of imports for over a decade to avoid full payment of duties.

In an Oct. 2022 court filing, India's customs authority called the company a "habitual litigant", accusing it of a conspiracy to defraud the government of legitimate revenue.

Pernod, which has challenged the demand, says it has "always endeavoured to act with full transparency" and complies with all local laws.


Tax disputes since 1994 have made it tough to do business in India, Pernod has said.

In a 2021 letter to Prime Minister Narendra Modi it said "ever-lasting litigation" had been a big strain on business and inhibited fresh investment by the group to expand in India.

In July 2022, it told the federal tax authority in a letter it faced "significant" business continuity challenges as operational challenges choked its supply chain.


India's alcohol market is heavily regulated and Pernod - like much of the industry - has been concerned about a 150% tax on liquor imports.

In April 2022, Pernod Ricard urged the government to scrap the tax, saying it posed a challenge by putting many of its drinks out of customers' reach. (Reporting by Arpan Chaturvedi and Aditya Kalra in New Delhi; Editing by Barbara Lewis and Clarence Fernandez)