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After Rs 1,773-cr fine,CCI orders fresh probe into Coal India

CCI had Tuesday announced a hefty penalty of Rs 1,773 crore on Coal India.

Written by PTI | New Delhi | Published: December 11, 2013 7:58:10 pm

A day after being slapped with a fine of Rs 1,773 crore by the CCI,Coal India today faced a fresh probe by the fair trade regulator into allegations that the state-run firm and its subsidiaries abused market dominance in its sale of fuel through e-auction route.

“Prima facie there appears to be contravention (of the Competition Act)… and it was a fit case to be investigated by Director General,” the Competition Commission of India (CCI) said in its new order.

The CCI had yesterday announced a hefty penalty of Rs 1,773 crore on Coal India after holding it guilty of dominant market position abuse in supply of fuel.

The latest probe follows complaint by an individual that the condition of e-auction wherein a bidder had to pay a penalty if he fails to lift coal but no such fine was imposed on Coal India if it failed to deliver the coal despite acceptance of the bid,was unfair.

“In a fair contract,the failure to perform the contract attracts penalties for both the parties,” the CCI said after looking into the complaint.

“In this case,the opposite party provided in the bid document a penalty for failure of performance of contract on the part of successful bidder alone and there was no provision for penalty for non-performance of the contract on the part of the opposite party (Coal India),” it added.

However,in regard to allegation that the bidders were to satisfy themselves with the quality of coal being offered from a source,the CCI said the same did not raise any competition issue.

“We think that those who bid for these auctions normally keep themselves informed about the quality of coal being dug out from these mines and they have their sources who keep them informed about the quality of available coal,” the CCI said.

Coal India had introduced a Spot e-Auction Scheme 2007 for facilitating the country wide ranging access to book coal online for all sections of coal buyers enabling them to buy coal through a simple,transparent and consumer friendly system of marketing and distribution of coal.

In its yesterday’s direction,the first major penalty on a state-owned company by the fair trade watchdog,the CCI had also also ordered Coal India to modify the fuel supply agreements (FSAs) after consulting stakeholders.

Directing it to cease and desist from anti-competitive practices,the CCI had also said that Coal India enjoyed an undisputed dominance in the country for production and supply of non-coking coal.

That order came on complaints filed by Maharashtra State Power Generation Company and Gujarat State Electricity Corp against Coal India and three subsidiaries — Mahanadi Coalfields,Western Coalfields and South Eastern Coalfields.

Coal India has said it would initiate “appropriate legal action” against CCI order.

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