The CCI dismissed allegations against Coal India Limited over its 2022 e-auction scheme, finding no prima facie evidence of anti-competitive practices. It upheld CIL's dominance but ruled the terms as standard.
The Competition Commission of India (CCI) recently dismissed allegations against Coal India Limited (CIL), accusing the company of abusing its dominant position through one-sided terms in its 2022 e-auction scheme. The CCI found no prima facie merit in the complaint filed by Bijay Poddar, thereby closing the case without initiating a detailed investigation.
The Allegations
Claims by the Informant
- Bijay Poddar alleged that the 2022 e-auction scheme included:
- A requirement for bidders to clear all outstanding dues before participating.
- Imposition of a fixed bid security with unequal effects.
- Clauses granting CIL the right to cancel auctions without justification.
- Poddar argued these terms were one-sided, lacked corresponding penalties for CIL, and unfairly impacted bidders.
CIL’s Defense
Denial of Dominance
- CIL countered that it does not hold a dominant position in the relevant market, claiming:
- It competes in the global coal market, where its non-coking coal is substitutable with imports.
- India contributes only 10.67% of global coal production, limiting CIL’s market control.
- Its operations are constrained by government regulations and Presidential directives.
Historical Precedent
- CIL noted similarities between the 2022 e-auction scheme and its 2007 scheme, which was previously reviewed and cleared by the CCI.
- It also highlighted that the Supreme Court is reviewing a related case concerning CIL’s dominance, urging the CCI to avoid conflicting outcomes.
- CIL emphasized its pricing is competitive, influenced by global benchmarks like the National Coal Index.
CCI’s Observations
Relevant Market and Dominance
- The CCI defined the relevant market as the “production and sale of non-coking coal to bidders under e-auction scheme in India.”
- It noted that:
- CIL fulfills 79% of India’s coal production needs and accounts for 90% market share in e-auctions.
- CIL operates independently of market forces, fulfilling the criteria for dominance under the Competition Act, 2002.
Evaluation of Clauses in 2022 Scheme
- The CCI examined alleged anti-competitive clauses in the scheme:
- Clauses identical to the 2007 scheme were found compliant with competition law.
- The third-party sampling process for coal quality was deemed fair and reciprocal.
- Allegations of delays in refunds were unsupported by evidence.
- The informant’s suggestions for complaint procedures and timeframes were seen as administrative issues, unrelated to competitive harm.
- The CCI revisited its 2013 ruling that found CIL in violation of the Competition Act but noted that concerns addressed in the new scheme had been resolved.
Source: COMPETITION COMMISSION OF INDIA, Case No. 25 of 2023
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