CCI now probes Coal India’s “unfair” fuel supply agreement with GHCL

Fair trade regulator Competition Commission of India (CCI) has asked its director-general to initiate a fresh probe into allegations that state-run Coal India Ltd (CIL) and one of its subsidiaries, Western Coalfields Ltd (WCL) for allegedly slapping unfair conditions in fuel supply agreements (FSAs) with power producers for supply of non-coking coal.

CCI ordered the director general to investigate the allegations of imposing unfair terms and conditions when selling coal to soda ash maker Gujarat Heavy Chemicals Ltd (GHCL), the complainant.

The CCI's director-general has been mandated to investigate the potential violation of section 4(2)(a)(i) of the Competition Act (abuse of dominant position by directly or indirectly imposing unfair or discriminatory condition in purchase or sale of goods or service) within 60 days, the commission said in an order dated 11 March published on the CCI's web site today.

CCI had earlier slapped a penalty of Rs1,773 crore on Coal India over a similar complaint filed by Maharashtra State Power Generation Company and Gujarat State Electricity Corp.

Coal India has approached the Competition Appellate Tribunal challenging CCI's order following which the penalty on the firm has been stayed.

''As the allegations in the present case also have been made by the informant in the context of requirement of coal for its captive power plant, the relevant market in this case would also be on the similar lines,'' CCI said in an order released today.

''Taking into account the averments and the allegations made by the informant (GHCL), the Commission is of prima facie view that the opposite parties appear to have contravened the provisions of...the (Competition) Act by imposing unfair terms and conditions upon the informant,'' CCI added.

GHCL had complained to CCI that Coal India and Western Coalfields ''had abused their dominance by dictating the terms and conditions of supply of coal through Letter of Assurance, FSA, MOU and the addendum to FSA by imposing such one-sided onerous conditions upon the buyers without seeking, much less considering, the inputs of the power producers and have thus acted independent of the market forces.''