The fair trade regulator Competition Commission of India has levied a penalty of ₹591.01 crore on public sector undertaking Coal India.
In its order, the CCI noted that the empowering clause reserving the right to unilaterally terminate the fuel supply agreements without any scope of review by any independent agency is unfair on the buyers. A government statement noted: “the Competition Commission of India (CCI) has found Coal India Ltd (CIL) and its subsidiaries to be in contravention of the provisions of Section 4(2)(a)(i) of the Competition Act, 2002, for imposing unfair/ discriminatory conditions in Fuel Supply Agreements (FSAs) with the power producers for supply of non-coking coal.”
“Due to the statutory monopoly enjoyed by CIL and its subsidiaries, the buyers are heavily dependent upon the coal companies and insertion of such clause gives CIL through its subsidiaries an overpowering advantage in the relevant market, which is patently unfair”, the CCI order noted.
The Commission has imposed a penalty on CIL of 1 per cent of the average turnover of the last three years.
This comes to ₹591.01 crore.
The Order has been passed by the CCI pursuant to the directions issued by the Competition Appellate Tribunal remanding the matter back, while setting aside the original order of CCI in which a penalty of ₹1773.05 crore had been imposed upon CIL.
The final order has been passed on a batch of informations filed by the Maharashtra State Power Generation Company Ltd and Gujarat State Electricity Corporation Ltd against Coal India Ltd and its subsidiaries (Mahanadi Coalfields Ltd, Western Coalfields Ltd, South Eastern Coalfields Ltd).
Modifications 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 and so on.
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.