CCI rejects complaint against Coal India

The Competition Commission today dismissed allegations of unfair business practices against state-owned Coal India Ltd (CIL) with regard to sale of coking coal.
The complaint filed by Jharkhand-based Industries and Commerce Association was also against Bharat Coking Coal Ltd (BCCL) and Coal Ministry, apart from CIL.
Disposing of the case against these entities, the fair trade regulator said in an order that "no case of contravention of the provisions of the (Competition) Act is made out" against them.
Industries and Commerce Association's members, which are involved in the manufacture and sale of hard coke, were buying coking coal from BCCL under the distribution system of 'linkage' till the introduction of National Coal Distribution Policy in October 2007.

Under the new policy, they were required to receive 75 per cent of their coal requirement through Fuel Supply Agreement (FSA) at notified prices to be fixed by CIL and balance 25 per cent through e-auction or import.
Since the introduction of the policy, the members of the complainant had entered into two consecutive FSAs of five years each with BCCL. The first FSA expired in 2013 and the second one is due to end in 2018.

Coal Ministry had issued guidelines in February 2016 to CIL regarding auction of linkages for non-regulated sectors.
As per the guidelines, the FSAs would not be renewed and complainant's members would be able to procure coal only if they successfully bid in the e-auction conducted by CIL, BCCL and Coal Ministry under the 'others' category for non- regulated sector.

Thereafter, CIL issued two documents -- 'scheme document for auction of coal linkages of coking coal in the others sub-sector' and 'model fuel supply agreement - non-regulated sector'.
The complainant had alleged that without the term 'others' being properly defined and comprising of miscellaneous industries of varying economic strength, such a move amounted to imposition of unfair and discriminatory condition.
In its order, CCI said the complainant has sought to bring Coal Ministry within the purview of the definition of 'enterprise' by arguing that the e-auction method can only lead to generation of supra-normal revenue to itself or profits for the companies under its control.

The complainant had also alleged that Coal Ministry, CIL and BCCL formed a 'group'.
Noting that the entire approach and reasoning adopted by the complainant is tenuous, CCI said while formulating policies, Coal Ministry is not engaged in any of the activities under the provisions of the Competition Act which define 'enterprise'.
The formulation of policies does not fall in the realm of commercial or economic activity as envisaged under the definition of the term 'enterprise', CCI said adding that it is unnecessary to examine as to whether Coal Ministry, CIL and BCCL constitute 'group' for the purposes of Section 4 of the Competition Act.

Section 4 pertains to abuse of dominant market position.
The regulator also said the challenge by the complainant to model FSA is also highly premature.
"The auctions for grant of linkages are yet to be conducted. Thus, at this stage, any examination of the terms of model FSA would be a speculative exercise until the FSAs are executed by the successful bidders in the e-auction and the final terms are concretised," the Competition Commission of India (CCI) said.
After concluding that no case of contravention of the provisions of the Competition Act is made out against CIL, BCCL and Coal Ministry, CCI dismissed the case.