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(2017) 2 CompLR 447 : (2017) 3 CPJ 49
COMPETITION APPELLATE TRIBUNAL (NEW DELHI)
( Before : Shri Rajeev Kher and Ms. Anita Kapur, Members. )
COAL INDIA LIMITED, WEST BENGAL — Appellant
Vs.
COMPETITION COMMISSION OF INDIA NEW DELHI — Respondent
Appeal No. 81 of 2014
Decided on : 20-03-2017
Shri Rajshekhar Rao, Shri Yaman Verma, Shri Prateek Bhattacharya and Ms. Gauri Puri, Advocates, for the Appellant; Shri Pallav Shishodia, Senior Advocate assisted by Shri Rishad A. Chowdhury and Ms. Asiya Khan, Advocates, Shri Ananda Ojha, Joint Director (Law), for the Respondent (Competition Commission of India); Shri Sagar Bandyopadhyay and Shri Chand Kureshi, Advocates, for the Respondent No. 2
Headnote:
APPEAL - COMPETITION ACT, 2002 - SECTION 4(2)(A)(I) - ABUSE OF DOMINANT POSITION - SALE OF NON-COKING COAL UNDER SPOT E-AUCTION SCHEME - RELEVANT MARKET - DOMINANCE - UNFAIR CONDITION - FORFEITURE OF EMD.
Fact of the Case:
Appellant, Coal India Limited (CIL), through its subsidiaries, operating independently of market forces and enjoying undisputed dominance in the relevant market of sale of non-coking coal under the Spot e- Auction Scheme (the Scheme) in India, imposed unfair conditions upon the bidders under the Scheme. The Commission held that the Appellant and its subsidiaries were in contravention of the provisions of Section 4(2)(a)(i) of the Act.
Finding of the Court:
The relevant market was sale of non-coking coal to the bidders under Spot e-Auction Scheme in India. The Commission rejected the argument of the Appellant that it was not a dominant enterprise in the wider global market and even in India, as it was a creation of statute and lacked autonomy and had social obligations. The Commission held that the Appellant abused its dominant position, because the Scheme had disturbed the normal contractual equilibrium inasmuch as uneven obligations were created thereunder whereby a buyer was saddled with penalty by way of forfeiture of EMD for non-lifting of coal after successful participation in the e-Auction, while no corresponding penalty was provided if despite acceptance of the bid , the Appellant failed to deliver coal.
Issues: 1. Whether we need to adjudicate on the issues of 'relevant market' and 'dominance', if the EMD clause is not unfair? 2. Whether the relevant market has been correctly determined in the impugned order and whether the Appellant was dominant in that market? 3. Whether the Appellant, if dominant in the relevant market, abused its dominant position? 4. Whether the statement of Shri Mukherjee recorded without allowing him to be accompanied by his legal representative, was to be annulled for violation of principles of natural justice? 5. What is the scope of our powers in disturbing the orders of the Commission?
Ratio Decidendi: 1. The finding of dominance in the relevant market is a necessary pre-condition before applying Section 4 of the Act. 2. The relevant product market was "the sale of non-coking coal to the bidders under Spot e-Auction". The relevant geographic market was India. 3. The Appellant abused its dominant position by imposing unfair condition of forfeiture of EMD for non-performance by a successful bidder under clause 9.2 of the Spot e-Auction Scheme. 4. The deposition of Shri Mukherjee recorded without permitting his legal representative to accompany him, was not in violation of the principles of natural justice and did not require annulment.
Final Decision: Appeal dismissed.
ORDER
1. This appeal is directed against the order dated 27th October, 2014 passed by the Competition Commission of India (hereinafter referred to as, 'the Commission') under Section 27 of the Competition Act, 2002 (for short, 'the Act'). The Commission held that the Appellant, Coal India Limited (CIL), through its subsidiaries, operating independently of market forces and enjoying undisputed dominance in the relevant market of sale of non-coking coal under the Spot e- Auction Scheme (for short, 'the Scheme') in India, imposed unfair conditions upon the bidders under the Scheme. The Commission, accordingly held the Appellant and its subsidiaries to be in contravention of the provisions of Section 4(2)(a)(i) of the Act. Further, the Commission directed the Appellant to cease and desist from indulging in the conduct found to be in contravention of the provisions of the Act and also directed that the terms and conditions of the Scheme be modified in the light of the findings recorded in the impugned order.
2. The Appellant, CIL, is a public limited company incorporated under the Companies Act, 1956. It is a holding company with seven wholly owned coal producing subsidiary companies and one mine planning & consultancy company. It is a Maharatna Company with 89.65% shareholding with the Government of India. Its shares were listed on BSE and NSE in 2010.
3. The facts of the case are that, Mr. Bijay Poddar of Kolkata filed an information vide his letter dated 18th July, 2013 seeking investigation under the Act in regard to the Scheme of the Appellant. The allegation was that, the Appellant and its subsidiaries in terms of clause 9.2 of the Scheme, forfeit Rs. 500 per tonne if bidders/buyers of coal did not lift the coal, while they did not pay any penalty, if they failed to supply coal. Further, it was alleged that earnest money was refunded after 30 to 60 days due to cumbersome procedure. It was, therefore, contended that the forfeiture clause was arbitrary and illegal and misuse of monopolistic power and the Scheme, being one sided, was illegal. Besides, it was claimed that when CIL and its subsidiaries failed to supply coal, buyers/bidders incurred losses.
4. The Commission vide its order dated 18th November, 2013 under Section 26(1) of the Act directed the Director General (DG) to cause an investigation to be made into the matter and submit a report. The DG after investigation submitted the report dated 31st July, 2014 to the Commission. The DG determined the relevant product market as "sale of non-coking coal to the bidders under Spot e-Auction" and the relevant geographic market was taken as whole of India. Accordingly, the relevant market was defined by the DG as "sale of non-coking coal to the bidders under Spot e-Auction Scheme in India". The DG held CIL and its subsidiaries to be dominant in the said relevant market and concluded that the provisions of Section 4(2)(a)(i) of the Act had been contravened by them by imposing unfair and/or discriminatory provisions in the sale of non-coking coal under the Spot e-Auction Scheme.
5. The Commission forwarded the investigation report to the parties and afforded them oral hearing. The parties filed their written submissions to the report of the DG besides making oral submissions. The Appellant claimed before the Commission that, the DG had mechanically relied on the conclusions reached in the previous cases decided against it, and had failed to provide any analysis of the definition of the relevant market and without considering the conditions of the market in relation to supply of coal through e- Auctions, arrived at a completely erroneous market definition. It was also pointed out that, no reason or explanation was given as to why the relevant product market constituted only sale of coal from the Spot e-Auction Scheme and not the Forward e-Auction Scheme. Another argument was that, th
