Competition panel slaps Rs 591-cr fine on Coal India

Tribune News Service

New Delhi, March 24

The Competition Commission of India (CCI) has issued an order against Coal India Limited (CIL) and its subsidiaries for abusing dominant position and imposed a penalty of Rs 591.01 crore upon CIL for the abusive conduct.

The CCI has found Coal India and its subsidiaries to be in contravention of the provisions of the Competition Act, 2002 for imposing unfair and discriminatory conditions in Fuel Supply Agreements (FSAs) with the power producers for supply of non-coking coal.

The final order was passed today on a batch of information filed by Maharashtra State Power Generation Company and Gujarat State Electricity Corporation Limited against Coal India Ltd. and its subsidiaries, Mahanadi Coalfields, Western Coalfields and South Eastern Coalfields.

The order has been passed by CCI pursuant to the directions issued by Competition Appellate Tribunal remanding the matter back while setting aside the original order of CCI in which a penalty of Rs 1,773.05 crore had been imposed upon CIL.

After hearing the parties afresh in terms of the directions issued by Competition Appellate Tribunal, CCI held that CIL through its subsidiaries operates independently of market forces and enjoys dominance in the relevant market of production and supply of non-coking coal in India.

The CCI noted in the order that CIL did not evolve, draft and finalise the terms and conditions of FSAs through a bilateral process and the same were imposed upon the buyers through a unilateral conduct.

Further, the CCI has imposed a penalty of Rs 591.01 crore upon CIL for the abusive conduct. While reducing penalty, the CCI noted the steps taken by CIL to improve the sampling procedure even post-passing of the original order by CCI.

Apart from issuing a cease and desist order against CIL and its subsidiaries, the CCI has directed modification of FSAs in light of the findings and observations recorded in the order. The impugned clauses related to sampling and testing procedure, charging transportation and other expenses for supply of ungraded coal from the buyers, capping compensation for supply of stones. For effecting the modifications in FSAs, CIL has been ordered to consult all the stakeholders. CIL has also been directed to ensure uniformity between old and new power producers as well as between private and PSU power producers.

Unfair trade practices 

The CCI has found Coal India and its subsidiaries to be in contravention of the provisions of the Competition Act, 2002 for imposing unfair and discriminatory conditions in Fuel Supply Agreements with the power producers for supply of non-coking coal

The order was passed on a batch of information filed by Maharashtra State Power Generation Company and Gujarat State Electricity Corporation Limited against Coal India and its subsidiaries

The order has been passed by CCI pursuant to the directions issued by Competition Appellate Tribunal remanding the matter back while setting aside the original order of CCI in which a penalty of Rs 1,773.05 crore had been imposed upon CIL.