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Competition Commission of India (CCI) has ordered an investigation against Coal India and its subsidiary Western Coalfields on a complaint alleging the company has abused its dominant position. 

 

The fair-trade regulator has already penalised Coal India and its subsidiaries heavily for abuse of dominance by imposing a penalty of Rs 1773 crore, the first major penalty by the regulator on a state-owned entity. 

The company has challenged the order and the matter is now before the competition appellate tribunal. "Prima facie a case was made out against Western Coalfields and Coal India for investigation for contravention of Section 4 of the Competition Act and it is a fit case to be investigated by Director General," commission said in an order on January 30. 

 

The investigation follows a complaint from Wardha Power that alleged that the state-run entity forced it to enter into a one-sided fuel s .. 

The investigation follows a complaint from Wardha Power that alleged that the state-run entity forced it to enter into a one-sided fuel supply agreement (FSAs) under which the latter did not have bargaining power or power to negotiate. 

 

Wardha Power also charged CILBSE -0.53 % of delaying execution of the FSAs. Wardha Power, which procures coal for its plants from Coal India, has also alleged CIL increased the price of the coal that was supplied to it from Rs 1613 per metric tonne to Rs 2177 per metric tonne without justifying the hike in prices. 

 

The company also said that CIL unilaterally inserted clauses that asked for bank guarantees equivalent to the entire investment in the coal plant. 

 

The commission in its order has also said that in case the DG finds violations by Coal India under the provisions of the act, "it shall also investigate the role of persons who at the time of such contraventions were in charge and were responsible for the business of the company." The investigation has been ordered under section 26(1) of the competition act 2002.

 

Source: ET