Competition watchdog Competition Commission of India (CCI) has cleared state-run Coal India Ltd of charges of anti-competitive practices while placing orders for supply of mining explosives.
The case pertains to a complaint by the Explosives Manufacturers Association of India (EMAI) that CIL was procuring 20-22% of its requirement from IOCL-BP without inviting bids, which is killing competition in the market.
However, after investigations and subsequent hearing of both parties, the CCI decided that even when Coal India has decided to source part of explosives from IOC-IBP to ensure continued supplies without disruptions, overall competition in the market prevails.
"The Commission is of the considered opinion that the OP (Coal India) in the present matter has not contravened any of the provisions of Section 4 and/or 3 of the Act and the matter deserves to be closed," the CCI said in its order.
Section 3 and 4 of the Competition Act 2002, pertain to abuse of dominant position and anti-competitive agreements, respectively.
Regarding allegations that the deal between Coal India and IOCL-BP is in contravention of Section 3 of the Act, CCI noted that the former is a buyer of explosives, while the latter is a supplier, and therefore, they do not belong to "the same level of production or supply chain", so an agreement between them is not violative of the said section.
CIL, which accounts for around 85% of the coal produced in the country, needs explosives to remove the soil layer covering coal deposits in mines.
Gulf Oil, Indian Oil and Indian Explosives are some of the main suppliers of mining explosives to CIL.
Further, on contraventions of Section 4 of the Act, the CCI noted by sourcing 20% of the supplies from IOCL-BP, Coal India is not affecting the relevant market in its favour, since supplies of a major portion are being sourced from other manufacturers.
"Therefore, it cannot be said that there is any violation of Section 4 (2)(b) (i) and Section 4 (2) (c) of the Act since the arrangement does not linit or restrict production of goods or provisions of services or market. There is no denial of market acess either," CCI said.
The CCI, which became fully functional in July last year, is the country’s anti-competition and anti-trust body, formed under an act of Parliament. The complaint by EMAI was admitted by the Commission in May last year.