The fair trade regulator Competition Commission of India has levied a penalty of Rs 591.01 crore on Coal India.
In its order, the CCI noted that the empowering clause reserving the right to unilaterally terminate the fuel supply agreements without any scope of review by any independent agency is unfair on the buyers. A government statement noted: "the Competition Commission of India (CCI) has found Coal India Ltd (CIL) and its subsidiaries to be in contravention of the provisions of Section 4(2)(a)(i) of the Competition Act, 2002, for imposing unfair/ discriminatory conditions in Fuel Supply Agreements (FSAs) with the power producers for supply of non-coking coal."
"Due to the statutory monopoly enjoyed by CIL and its subsidiaries, the buyers are heavily dependent upon the coal companies and insertion of such clause gives CIL through its subsidiaries an overpowering advantage in the relevant market, which is patently unfair", the CCI order noted.
The Commission has imposed a penalty on CIL of 1 percent of the average turnover of the last three years.
This comes to a Rs 591.01 crore.
The Order has been passed by the CCI pursuant to the directions issued by the Competition Appellate Tribunal remanding the matter back while setting aside the original order of CCI in which a penalty of Rs 1773.05 crore had been imposed upon CIL.
The final order has been passed on a batch of information filed by the Maharashtra State Power Generation Company Ltd and Gujarat State Electricity Corporation Ltd against Coal India Ltd and its subsidiaries (Mahanadi Coalfields Ltd, Western Coalfields Ltd, South Eastern Coalfields Ltd).
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CCI slaps penalty on Coal India
By IndianMandarins - 2017-03-27 08:24:37
The fair trade regulator Competition Commission of India has levied a penalty of Rs 591.01 crore on Coal India.
In its order, the CCI noted that the empowering clause reserving the right to unilaterally terminate the fuel supply agreements without any scope of review by any independent agency is unfair on the buyers. A government statement noted: "the Competition Commission of India (CCI) has found Coal India Ltd (CIL) and its subsidiaries to be in contravention of the provisions of Section 4(2)(a)(i) of the Competition Act, 2002, for imposing unfair/ discriminatory conditions in Fuel Supply Agreements (FSAs) with the power producers for supply of non-coking coal."
"Due to the statutory monopoly enjoyed by CIL and its subsidiaries, the buyers are heavily dependent upon the coal companies and insertion of such clause gives CIL through its subsidiaries an overpowering advantage in the relevant market, which is patently unfair", the CCI order noted.
The Commission has imposed a penalty on CIL of 1 percent of the average turnover of the last three years.
This comes to a Rs 591.01 crore.
The Order has been passed by the CCI pursuant to the directions issued by the Competition Appellate Tribunal remanding the matter back while setting aside the original order of CCI in which a penalty of Rs 1773.05 crore had been imposed upon CIL.
The final order has been passed on a batch of information filed by the Maharashtra State Power Generation Company Ltd and Gujarat State Electricity Corporation Ltd against Coal India Ltd and its subsidiaries (Mahanadi Coalfields Ltd, Western Coalfields Ltd, South Eastern Coalfields Ltd).
