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CCI slaps Rs 1,773 cr fine on Coal India

Wednesday, 11 December 2013

New Delhi: Competition Commission has slapped a fine of Rs 1,773 crore on Coal India, the first major penalty on a state-owned company by the fair trade watchdog, for abusing its dominant position in fuel supplies.     

Touching upon a host of issues related to coal supplies, including sampling and testing procedures, the regulator also ordered Coal India to modify the fuel supply agreements (FSAs) after consulting stakeholders. The Competition Commission of India (CCI), in its order on December 9, said that Coal India is operating independently of market forces and enjoys an undisputed dominance in the country for production and supply of non-coking coal.     

The fair trade regulator has also directed the company to cease and desist from anti-competitive practices.  The order came on complaints filed by Maharashtra State Power Generation Company and Gujarat State Electricity Corp against Coal India and three subsidiaries -- Mahanadi Coalfields, Western Coalfields and South Eastern Coalfields.   

The quantum of penalty -- Rs 1,773.05 crore -- is equal to three per cent of the PSU's average turnover for the last three years. When contacted, a Coal India spokesperson declined to comment. However, a company source said: "The company will respond after seeing the order. Further course will be decided then."     

The ruling assumes significance since in recent times, Coal India has drawn flak for fuel shortages that have been hurting the country's power generation. According to the CCI order, Coal India abused its dominance and did not try to evolve/draft/finalise terms and conditions of FSAs through a mutual bilateral process the same were sought to be imposed upon the buyers without seeking, much less considering, the inputs of the power producers," the CCI said.     

The Commission said that Coal India was "imposing unfair/discriminatory conditions in FSAs with power producers" that violate fair trade norms. Besides, the CCI has directed Coal India to ensure parity between old and new power producers as well as between private and public sector power producers, "as far as practicable".



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