CCI probing sugar mills for alleged price fixing

Action against allegations of price manipulation by OMCs and sugar during the bidding for ethanol blending with petrol

The Competition Commission of India (CCI) on Monday said its director-general (investigation) was probing allegations of price manipulation by oil marketing companies (OMCs) and sugar mills during the bidding for ethanol blending with petrol.

Showcause notices have been sent to 18 sugar mills for alleged collusion with OMCs to fix prices, a senior member of the commission said. Notices might follow to OMCs.

The investigation was triggered around September, on various complaints. After a preliminary study, CCI decided to refer the matter to the DG (I).

The complainants included liquor manufacturers such as Lords Distillery and life sciences companies such as Jubilant Life Sciences, which uses ethanol or industrial alcohol for making chemicals. They have alleged identical prices were quoted in bids offered by various ethanol suppliers, especially in Uttar Pradesh and Gujarat. And, that most ethanol suppliers which colluded were either members of the Indian Sugar Mills Association or the National Federation of Cooperative Sugar Factories.

CCI had received similar complaints earlier, against 10-12 sugar mills.

The complaints also alleged that most of the ethanol suppliers who have colluded are either members of the Indian Sugar Mills Association (ISMA) or the National Federation of Cooperative Sugar Factories Limited (NFCSF).

IIn November 2012, the Cabinet Committee on Economic Affairs had approved five per cent mandatory blending of ethanol with petrol. This was notified under the Motor Spirits Act, on January 2. According to the Act, OMCs had to record five per cent ethanol content in petrol by June 30, 2013. This was delayed for various reasons.

However, considering the supply orders cleared to sugar mills, the target seems unachievable. In a letter to the petroleum ministry dated May 29, Isma had said OMCs had cleared ethanol supply orders for merely 250 million litres, against the requirement of 1,050 million litres. This means that only 25% of the OMCs' five% ethanol blending requirements had been cleared.

The official said it may also send notices to OMCs seeking details and their version on the process followed.