The Competition Commission of India (CCI) on Friday March 24,2017 slapped a fine of Rs. 591 crore on Coal India Limited (CIL) for having unfair conditions in fuel supply agreements.
The fair trade regulator also directed the coal behemoth to “cease and desist” from anti-competitive practices.
On earlier occasions also, Coal India has come under the lens of the CCI.
In a 56-page order, the CCI found the company violating competition norms by “imposing unfair/ discriminatory conditions in the matter of supply of non-coking coal to power producers”.
Further, the CCI said, Coal India did not “evolve/ draft/ finalise the terms and conditions of FSAs (Fuel Supply Agreements) through a mutual bilateral process and the same were imposed upon the buyers through a unilateral conduct“.
The penalty amount translates to one per cent of Coal India’s average turnover for the three-year period from 2009-10 to 2011-12.
Asking the company to modify the fuel supply agreements, the regulator said it should be ensured that there is uniformity between old and new power producers as well as between private and PSU power producers.
“Specifically, Coal India Ltd. is directed to incorporate suitable modifications in the fuel supply agreements to provide for a fair and equitable sampling and testing procedure,” the order said.
The regulator suggested that the company consider the feasibility of sampling at the unloading-end in consultation with power producers, besides adopting international best practices.
The ruling has come on complaints filed against Coal India and its three subsidiaries — Mahanadi Coalfields, South Eastern Coalfields and Western Coalfields. They were filed by the Maharashtra State Power Generation Company and the Gujarat State Electricity Corporation.
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