The Competition Commission of India (CCI) recently dismissed a plea alleging that Coal India Limited (CIL) abused its dominant position by introducing one-sided terms in its 2022 e-auction scheme [Bijay Poddar vs Coal India Limited].
The CCI found no prima facie merit in the allegations raised by the informant, Bijay Poddar, to warrant a full-fledged investigation against CIL. “The Commission is of the view that there is no prima facie case of contravention of provisions of the Act (Competition Act, 2002) warranting an investigation into the matter. Accordingly, the Information is directed to be closed forthwith,” the CCI stated in its order dated December 30, 2024.
Poddar alleged that the 2022 e-auction scheme included requiring bidders to clear all outstanding dues before participation, imposing a fixed bid security with unequal effects, and granting CIL the unilateral right to cancel auctions without justification. These terms, he claimed, were one-sided and lacked corresponding responsibilities or penalties for CIL.
In its defense, CIL argued that it does not occupy a dominant position in the relevant market, despite being the largest coal producer in India, as it cannot act independently of market forces. The company stated that the non-coking coal supplied under its e-auction scheme is substitutable with imported non-coking coal, which competes globally due to similar characteristics and pricing. CIL further highlighted that India contributes only 10.67% of global coal production (as of 2023), indicating significant international competition. Additionally, it maintained that its operations are constrained by government regulations and Presidential directives, limiting its autonomy.
CIL also pointed out that many clauses in the 2022 e-auction scheme were similar to those in the 2007 scheme, which had previously been reviewed and cleared by the CCI. The company noted that its alleged dominance in the e-auction market is already under review by the Supreme Court. It referenced a 2013 CCI finding that held CIL in a dominant position in the coal market and penalized it for abuse of dominance. The initial penalty of ₹1,773 crore was later reduced to ₹591 crore by the Competition Appellate Tribunal (COMPAT), and the case remains pending before the Supreme Court. To avoid conflicting judicial outcomes, CIL urged the CCI to defer from making any conclusive decisions in the present case.
The CCI identified key issues for examination, including the definition of the relevant market, CIL’s dominance within it, and potential abuse of this dominance under Section 4 of the Competition Act. While CIL proposed the relevant market as the global market for the “sale of non-coking coal except under Fuel Supply Agreements,” the CCI deemed this untenable and confined the appropriate market to India. “Accordingly, ‘production and sale of non-coking coal to bidders under e-auction scheme in India’ is considered as the relevant market in the instant case,” the CCI held.
On the issue of dominance, the CCI observed that CIL fulfills approximately 79% of India’s coal production needs and accounts for around 70% of coal production in the country. Furthermore, it noted that CIL has over 90% market share in the e-auction of coal and operates independently of market forces. The CCI concluded that CIL holds a dominant position in the relevant market.
Regarding the clauses in the e-auction scheme alleged to be anti-competitive, the CCI revisited its 2013 observations on similar clauses in the 2007 scheme. It found that the 2022 scheme adequately addressed earlier concerns and provided a balanced framework. The CCI also dismissed allegations about delays and lack of interest in refunds, finding no evidence to support these claims. Suggestions for formal complaint procedures and timeframes were deemed administrative matters without competitive harm.
The CCI further addressed allegations of unfair conditions related to coal quality determination, stating that the third-party sampling process was comprehensive and reciprocal. It ruled that clauses criticized as one-sided were standard for contracts of this nature and not anti-competitive. Allegations regarding delays in refunds of excess levies were similarly dismissed, as the CCI found the relevant clause reciprocal and noted no evidence of pending refunds.
In conclusion, the CCI determined that there was no contravention of the Competition Act and dismissed the plea against CIL.
This case underscores the complexities of defining dominance and assessing competition in regulated markets like coal, where global and domestic factors interplay with policy directives. While CIL’s dominant market share was acknowledged, the 2022 scheme’s design and global competition were deemed sufficient to counter allegations of anti-competitive behavior.
