CCI quashes appeal against distribution arm of REC

The REC will have to secure work in the market for consultancy services for financing of rural electrification projects

The Competition Commission of India (CCI) has quashed a case against REC Power Distribution Company Limited (RECPDCL) of abusive conduct.

The wholly owned subsidiary of Rural Electrification Corporation (REC) was accused of leveraging its association with REC to secure work for consultancy services for financing of rural electrification projects.

In the judgment dated May 4, CCI disagreed with the Director General (DG)’s investigative report filed last year, and held that there was no evidence to establish RECPDCL’s conduct was abusive. The office of the Director General had found a violation. The final order cannot be appealed at the Competition Appellate Tribunal.

“The CCI refused to accept plain statements of competitors without any supporting evidence and gave due consideration to statements of customers who did not have any complaints,” said Naval Chopra — Partner, Shardul Amarchand Mangaldas & Co, the law firm advising REC in this case.

The case was filed by an anonymous informant, alleging RECPDCL had broken some provision of the Competition Act, 2002 (Competition Act). The application alleged that RECPDCL leveraged its association with REC to secure work in the power distribution market for consultancy services for securing financing for rural electrification projects. In January 2015, CCI prima facie found merit in the allegations and had directed an investigation by the DG. The DG found REC/RECPDCL had used its position of dominance in the market for financing of rural electrification projects under centrally sponsored programmes.

“CCI is maturing as a competition authority and appears to have finally recognised globally accepted competition law principles for assessing an abusive leveraging claim,” said Chopra.

In addition, it was refreshing to see the detail in which the CCI went into the DG’s record and statements of stakeholders in conducting a holistic assessment of the impact of the alleged conduct,” said Chopra.