SAIL cleared of abuse of dominance

The Competition Commission of India (CCI) recently said that an exclusive arrangement for the supply of rails to Indian Railways, prompted by a need for reliable supplies, “is rational both on price and non-price considerations and is not anti-competitive”.

With this the CCI closed a long-running abuse of dominance case triggered by a complaint filed in October 2009 by Jindal Steel & Power (JSPL). In it JSPL had alleged that a memorandum of understanding (MOU) between Steel Authority of India (SAIL) and Indian Railways, signed in February 2003, is an exclusive supply agreement that in effect causes an appreciable adverse effect on competition. JSPL, which had developed the capacity to supply rails, alleged that it was being denied market access.

Arguing that the MOU had been entered into to ensure supply of rails at a time when no other player was prepared to do so, SAIL pointed out it had to undertake an investment of over ₹7 billion (US$140 million) solely for the manufacture of rail steel. SAIL also submitted that the MOU was “nothing but a record of the policy decision of the government of India”.

The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.