Information

1. The present information was received by Competition Commission of India (CCI) (hereinafter referred to as the "Commission") from Jindal Steel & Power Limited (hereinafter referred to as "JSPL") on 16th October, 2009 under Section 19(1) of the Competition Act, 2002 (hereinafter referred to as "Act"). The information was filed against Steel Authority of India Ltd. (hereinafter referred to as "SAIL").

2. The information alleges abuse of dominant position by SAIL in violation of Section 4(1) of the Act. As per the information, SAIL has entered into an exclusive supply arrangement with Indian Railways (IR) through Memorandum of Understanding (MOU) dated 1.2.2003. It is alleged that the said MOU result in denial of market access to JSPL by foreclosing a substantial part of the relevant market. As per the information, the MOU contains exclusive supply obligations and results in refusal to deal which causes appreciable effect on competition in the relevant market in India in contravention of Section 3(4) of the Act.

3. As per the information, with nearly 96% market share, SAIL has a dominant position and substantial market share in the market for rails in India that are compliant with Research Design & Standards Organisation (RDSO), Ministry of Railways specifications. The MOU dated 1.2.2003 between IR and SAIL has the effect of foreclosing substantial part of the relevant market and has also led to reduction and/or elimination of competition in the relevant market.

4. Furthermore, the MOU has the effect of restricting IR's ability to fulfil its requirements for rail from sources other than SAIL. The MOU indirectly imposes restraint on IR so that IR cannot deal with other sellers during the exclusivity period even if other suppliers are able to provide better quality rails and at more competitive prices. This can cause significant market distorting foreclosing effect. It is averred that the higher the percentage of total sales in the relevant market, i.e. affected, the longer the duration of the conduct and the more regularly such conduct is done, the greater is an anti competitive foreclosing effect on the market.

5. The information describes the SAIL as the leading steel making Company in India. It is a fully integrated iron and steel producer, making both basic and special steel for domestic construction, engineering, power, railway, automotive and defence industries and for SAIL in export market. It manufactures and sells a broad range of steel products including sheets, coils, structural products, railway products, bars, rods, alloy steel and others. It is ranked amongst the top 10 basic companies in India in terms of turnover.

6. The information describes that JSPL is a listed public company registered under the Companies Act, 1956. It is engaged in the manufacture of steel and steel products at its manufacturing facility at Raigarh, Chhatisgarh and production of power through its subsidiary Jindal Power Ltd. JSPL also manufactures long finished rails of 120 metres length using RH Degasser technology. RDSO has certified JSPL's rail manufacturing facility compliant with IRS-T-12-96 and specifications IRS-T-12-2009.

7. The information also gives a factual background of the case and submits that IR had expressed intention to develop the indigenous source of quality rails in April, 1988. At that time, IR proposed to procure 100,000 tonnes p.a. from such new sources. The informant JSPL informed IR in January, 2001 that it was going to set up rail manufacturing mill conforming to international standards. In June 2001, IR informed JSPL that they may purchase rails from JSPL if the same were of appropriate quality and offered at competitive prices and on the required terms and conditions. JSPL continued to invest substantial sums on building its rail mill.

8. On 7.9.2001, JSPL informed IR that its rail mill could begin production in the 2nd quarter of 2002-03. However, on 21.12.2001, IR informed JSPL that SAIL had committed