CCI to probe Coal India fuel pact with sponge iron makers

Fair trade regulator CCI has ordered a probe into the allegations that state-run Coal India and its subsidiaries abused dominant market position in supplying fuel to sponge iron manufacturers.

The probe against the country's largest coal miner comes on a complaint filed by Sponge Iron Manufacturers Association.

Finding prima facie evidence of abuse of dominant market position, the Competition Commission of India (CCI) on July 23 directed a probe against Coal India and its six subsidiaries, an order posted on CCI website today said.

These subsidiaries are -- Central Coalfields, Eastern Coalfield, Western Coalfields, South Eastern Coalfields, Northern Coalfields and Mahanadi Coalfields.

The fair trade regulator has asked the Director General, its investigation arm, to club the probe of this latest case with three other matters of similar nature that are currently been investigated against Coal India.

Sponge Iron Manufacturers Association has alleged Coal India of various anti-competitive practices such as one-sided Fuel Supply Agreement (FSA) and MOUs and short supply of coal despite an assured quantity under FSA or under the New Coal Distribution Policy (NCDP).

It also charged CIL of diverting coal mandated to be supplied under FSA to sale through e-auction to earn super normal profits, among others.

CCI said that it was "apparent" from information provided that the association's member companies were totally dependent on Coal India and its subsidiaries for supply of coal for running their sponge iron plants.

"Taking advantage of their dominant position, Opposite Parties (Coal India and its subsidiaries) were allegedly not adhering to the terms and conditions in the FSA/MOUs and conducting themselves in a manner detrimental to the interest of the informant," CCI said.

"The terms and conditions of FSA also show it being heavily loaded in favour of Opposite Parties," it added.

Earlier, the Commission had ordered probe against Coal India following complaints from different entities including Maharashtra State Power Generation Company (MAHAGENCO) and West Bengal Power Development Corporation.