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Competition cop fines Coal India

New Delhi, Dec. 10: The Competition Commission of India (CCI) has slapped a penalty of Rs 1,773 crore on Coal India for allegedly abusing its dominant position in the supply of fuel.

This is the first major penalty on a state-owned company by the fair trade watchdog.

Touching upon a host of issues related to coal supplies, including sampling and testing procedures, the commission also ordered Coal India to modify the fuel supply agreements (FSAs) after consulting stakeholders.

The CCI said it had found out that Coal India was operating independently of market forces and enjoyed an undisputed dominance in the production and supply of non-coking coal.

The penalty was imposed by the CCI through an order dated December 9, an official release said today.

The company has also been directed to cease and desist from anti-competitive practices.

The ruling follows complaints filed by Maharashtra State Power Generation Company and Gujarat State Electricity Corporation against Coal India and its three subsidiaries — Mahanadi Coalfields, Western Coalfields and South Eastern Coalfields.

The amount of penalty is equal to 3 per cent of the PSU’s average turnover for the last three years. A CIL 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 the 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 Coal India and its subsidiaries had been found to be “imposing unfair/discriminatory conditions in the fuel supply agreements (FSAs) with the power producers for supply of non-coking coal”.

Besides, the CCI has directed the company to ensure parity between old and new power producers as well as between private and public sector power producers, “as far as practicable”.

In deciding on dominance, the CCI took into consideration various factors, including the fact that the company’s conduct is “affected and constrained by directions received from various stakeholders”, including the coal and power ministries.

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