CCI orders fresh probe against CIL

Written by fe Bureau | New Delhi | Updated: Dec 12 2013, 08:54am hrs
Within 24 hours of slapping a penalty of R1,773 crore on Coal India (CIL) for abusing market dominance, the Competition Commission of India (CCI) on Wednesday ordered a probe into the allegations that CIL and its subsidiaries abused market dominance in the sale of fuel via the 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 CCI said in its new order.

On Tuesday, CCI had imposed a fine of R1,773 crore on CIL after finding it guilty of abusing its dominant market position on the matter of supply of fuel.

The order for fresh probe follows complaint by an individual over the terms and conditions of the e-auction process. As per the complaint, there is a condition according to which a bidder has to pay a penalty if he fails to lift coal but no such fine will be imposed on Coal India if it failed to deliver the coal despite acceptance of the bid. The complaint termed this condition as "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), the CCI order said.

Coal India plans legal action against CCI

Coal India on Wednesday said it will initiate appropriate legal action regarding the CCI order slapping R1,773 crore as penalty on it for unfair trade practices. The company is seized of the matter and appropriate legal action shall be initiated after the receipt of the copy of the order by post, CIL said in a filing to the BSE.

According to experts, CIL can approach the competition appellate tribunal (Compat) within 60-days against the CCI order.

The CCI fine is the first major penalty on a state-owned company by it. CIL has been charged for allegedly abusing its dominant position in fuel supplies.