Coal India penalty is first for a public sector entity

By Amit Tambe and Kunal Chandra, Trilegal
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In a landmark decision on 9 December 2013, the Competition Commission of India (CCI) imposed its first penalty against a state-run enterprise, ordering Coal India to pay ₹17.73 billion (US$286.2 million) for abusing its dominant position, essentially in relation to its fuel supply agreements (FSAs) with power generation companies. The CCI stated that the objective behind the fine was not only to penalize Coal India but also to deter other enterprises that may consider anti-competitive activities.

Apart from the penalty, the CCI ordered Coal India to modify its FSAs with power generation companies after consulting the stakeholders so as to ensure fairness and parity between private and public sector power producers.

Three complaints

The CCI considered two complaints filed by Maharashtra State Power Generation Company against Coal India and one of its subsidiaries, alleging abuse of dominance in contravention of the Competition Act, 2002, and a similar complaint filed by Gujarat State Electricity Corporation. In essence the complaints related to onerous and one-sided FSAs, or the execution of non-comprehensive memorandums of understanding instead of FSAs, of the dominant parties.

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Amit Tambe is a partner at Trilegal and Kunal Chandra is a counsel. Trilegal is a full-service law firm with offices in Delhi, Mumbai, Bangalore and Hyderabad.

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Email: amit.tambe@trilegal.com

kunal.chandra@trilegal.com

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