UNDER SECTION 26(6) OF THE COMPETITION ACT

The present matter relates to information dated 11.05.2009 filed by M/s Royal Energy Ltd. (the informant) before the office of Directorate General of Investigation and Registration (DGI&R), Monopolies and Restrictive Trade Practices Commission (MRTPC) against M/s Indian Oil Corporation Ltd.(IOCL), M/s Bharat Petroleum Corporation Ltd. (BPCL) and M/s. Hindustan Petroleum Corporation Ltd. (HPCL) alleging unfair and monopolistic trade practices in breach of the erstwhile Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act).

2. Facts and Allegations of the Case in Brief

2.1 The informant had submitted that it was the largest manufacturer of bio-diesel, having its plant in Maharashtra. It was earlier associated with many organizations like Indian Railways, BEST, Essar Steels, Kirloskar etc. as a vendor of bio-diesel. In addition, it was having its own retail bio-diesel pumps in Maharashtra.

2.2 The Informant alleged that since its product was causing a threat to diesel supplied by IOCL, BPCL & HPCL (hereinafter collectively called public sector OMCs), they started informing their clients that they would be supplying bio-diesel blended petro-diesel to them directly. It has also been stated that as per purchase policy of OMCs, they were supposed to purchase bio-diesel at a pre-determined rate, which at the time of filing the information was Rs.26.50/-per litre, while price of bio-diesel sold independently by the informant was Rs.31/-per litre. Since the consumers were bound to purchase blended bio-diesel only from the OMCs, the bio-diesel manufacturers were per force to sell their product to OMCs at a rate lower than the cost of manufacturing.

2.3 According to the informant, this act of OMCs constituted 'Monopolistic Trade Practice' prohibited under MRTP Act. The informant had also submitted a letter dated 15.06.2009 addressed to DGI&R, MRTPC informing that Ministry of Petroleum & Natural Gas (MoPNG) had issued a letter requesting the State Government to ensure elimination of the sale and possession of bio-diesel in the market. The informant contended that this letter was issued on the complaints of the OMCs who did not want to face competition. Further, while on the one side the government was promoting the usage of green fuel; by issuing such a letter it intended to kill the green fuel industry.

3. The office of DGI&R vide its letter dated 09.07.2009 told informant that it might approach the MoPNG for its grievances. However, the informant vide letter dated 13.07.2009 requested the office of DGI&R for a hearing on the issue. Meanwhile, due to the repeal of MRTP Act, the case was transferred to the Competition Commission of India (the Commission) under section 66 (6) of the Competition Act, 2002 (the Act).

4. On receipt of the case from the MRTPC, the Commission vide its order dated 29.06.2010 decided that the comments of Ministry of Petroleum and Natural Gas and Ministry of New and Renewable Energy be obtained. Both the ministries submitted their replies and their representatives also appeared and made oral submissions before the Commission. The informant was also called to appear for the hearing, but no one turned up. An advisory dated 26.10.2010 was thereafter issued to both the ministries asking them to take suitable measures in the matter so that no competitive harm was caused in the market.

5. The Commission being of the opinion that there existed a prima facie case, vide its order dated 20.05.2011 directed the Director General (DG) to investigate the matter.

6. The DG conducted the investigation in the matter and submitted his report dated 16.11.2011 to the Commission.

6.1 During investigation into the matter, DG called for replies from various parties including three public sector OMCs. The three OMCs denied the allegations of forming a cartel. They submitted that Government of India through Ministry of Petroleum and Natural Gas (MoPNG) formulated a Biodiesel Policy (BPP) whi