Coal India case: Compat for status quo in FSA changes

Written by fe Bureau | New Delhi | Updated: Jan 14 2014, 18:21pm hrs
The Competition Appellate Tribunal (Compat) wants status quo on changes in fuel supply agreements (FSAs) and on cease and desist' terms imposed by the Competition Commission of India (CCI) on the countrys largest coal miner, Coal India (CIL), till the matter comes up for hearing on February 11.

The CCI order of December 9 had imposed a penalty of Rs 1,773 crore on Coal India for indulging in anti-competition practices related to coal supplies, including unfair conditions imposed on the clauses related to sampling and testing of non-coking coal.

As per the order, the CCI investigation found Coal India and its subsidiaries "imposing unfair/discriminatory conditions in FSAs with the power producers for supply of non-coking coal", in violations of the provision of the Competition Act, 2002.

The CCI order had also directed CIL to modify FSAs. CCI also said in the order that these directions must be complied within a period of 30 days from the date of receipt of the order.

The CCI order said Coal India is operating independently of market forces and enjoys an undisputed dominance in the country for production and supply of non-coking coal.

However, CIL, which has filed an appeal before Compat against the CCI order, maintains that it did not violate any provisions of the competition law. It also wants a stay on the penalty of R1,773 crore imposed by the CCI.

Compat, however, did not stay the penalty imposed by the CCI order while hearing the matter on Monday.

According to a senior lawyer, CCI as well as the two complainants in the matter Maharashtra State Power Generation (Mahagenco) and Gujarat State Electricity Corporation (GSECL) are expected to get notices from the tribunal. Coal India has sought stay on the CCI order slapping penalty on it for allegedly abusing its dominant position in fuel supplies.

The Rs 1,773.05-crore penalty is equal to 3% of the PSU's average turnover for the last three years.

On December 11 last year, Coal India said that appropriate legal action shall be initiated after the receipt of the copy of the order by post.

Last week, Coal India chairman and MD S Narsing Rao said: "We have filed an appeal before Compat. We have sought stay on the CCI order."

According to the regulator, Coal India enjoys an undisputed dominance in the country over production and supply of non-coking coal. The order further said that Coal India abused its dominance and did not try to evolve/draft/finalise terms and conditions of FSAs through a mutual bilateral process with the procurers.