Verma says no anti-competitive practices

Written by Ashish Sinha | New Delhi | Updated: Dec 4 2012, 07:14am hrs
CCI seeks info from steel min on appointment, functioning of heads of two PSUs

Even as the Competition Commission of India (CCI) examines the complaint filed against the common head of two public sector undertakings Steel Authority of India (SAIL) and National Mineral Development Corporation (NMDC) CS Verma, chairman, SAIL, and acting chairman of NMDC, has dismissed the issue stating that there is no violation of competition law or adoption of anti-competitive practices by the two PSUs with him holding a dual charge.

Speaking to FE, Verma said: I dontthink there is any issue of conflict of interest in my being head of both steel making SAIL and iron ore producer NMDC. SAIL has its own captive iron ore mines and is not dependent on NMDC for it. We have, in fact, never purchased ore from NMDC. And if people feel that in my current role I could unfavorably influenceore pricing for private steel companies, who are also SAILs competitors, let me clarify that NMDC has just 15% market share in domestic ore sales and companies have choice over input.

Sources said the CCI has now asked for more information from the steel ministry on the appointment, functioning and role of heads of two PSUs to establish any prima facie violation of the Competition Act. For CCI, this matter is amongst the several matters pertaining to the allegation of anti-competitive practices adopted by PSUs across the sectors including uniform pricing of petrol by oil PSUs, or allegations over fixing of tariffs by the state-owned general insurance companies among others.

When asked, CCI chairman Ashok Chawla said the commission has received some information on the issue. Some information has been filed with us. We are looking at it and we are still to take a call in the matter, Chawla had told FE recently.

The matter came to the fore after some member of Parliaments wrote to the Prime Ministers Office highlighting the issue of single person as the head of two PSUs.

According to a senior lawyer who deals with cases under the Competition Act, the appointment of chairman of SAIL or any other PSU is not covered under the Competition Act.

However, if the PSUs indulge in anti-competitive practices, then complainant can take legal remedy under the Competition Act.

Even the CCI can take up the matter suo moto or on complaint under section 19 and 20 of the law. This sort of relationship between a steel manufacturer and the producer of raw material (iron-ore) comes under the concept of vertical restraint, something covered under the Competition Act, said a legal expert on competition law. The concept of vertical restraints simply means business agreements between firms or individuals at different levels of the production and distribution process.

Sources in the CCI said the commission will take a final view in the matter only after examining the implications of having one person as the head of two PSUs and the business conduct of the two PSUs under the command of one person by going through the data on relevant market, impact of decisions in one PSU on another (if any), impact on pricing of iron-ore and steel of the two PSUs etc.

Meanwhile, steel ministry insiders said that the process of selection of new NMDC head is already underway with the Public Enterprises Selection Board inviting applications from interested candidates.

If the time lines are met, the appointment process may be completedby March 2013, a steel ministry official said.